MEETING STATUS: PUBLIC

LEGISLATIVE ASSEMBLY SESSION: 1/62Motion No: 1

PRINCE EDWARD ISLAND Year: 2004

VERBATIM TRANSCRIPT OF HOUSE COMMITTEE PROCEEDINGS

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMMITTEE: STANDING COMMITTEE ON AGRICULTURE, FORESTRY &ENVIRONMENT

Wednesday, February 25 , 2004

SUBJECT(S) BEFORE THE COMMITTEE:

Further consideration of the impact of the BSE crisis and hog crisis on Prince EdwardIsland.

NOTE:This Transcription has NOT been edited nor subsequently comparedwith the original tape. It is intended to provide an indication of Committee discussion only and is NOT certified by the Legislative Assemblyto be a true copy of the discussion.

COMMITTEE Wilbur MacDonald, ChairMEMBERS PRESENT: Wilfred Arsenault

Andy MooneyEva RodgersonFred McCardleWayne Collins replacing Hon. Mitch MurphyRichard BrownRon MacKinley

MEMBERS PRESENT: Hon. Robert GhizCarolyn Bertram

STAFF: Marian Johnston, Clerk of Committees.Wayne MacKinnon, Department of Agriculture

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STANDING COMMITTEE ON AGRICULTURE, FORESTRY AND ENVIRONMENTWednesday, February 25, 2004

1:00 p.m.

Part I - National Farmer’s Union: Danny Hendricken, Arnold MacFarlane, Steve MacKinnon, Kevin ArsenaultPart II - Eastern Livestock Equipment : John EarlPart III - Kensington Agricultural Services Ltd. : Doug LeClairPart IV - Feed Company Representatives: Alan Livingston, Bernard Jay, Ron Gamble, Dominic Johnson, John Scales, Shawn Kerry, Ed Doyle, Mary Van Den Broek-GrantPart V - Financial Institution Representatives: Paul Moffett, John HutchingsPart VI - Tourism Industry: Don CudmorePart VII - Status of Women: Patricia MacAulayPart VIII - Producer: Gordon Sobey, Susan SobeyPart IX - Atlantic Veterinary College: Dr. Dan HurnickPart X - Reddin Farm Equipment: John ReddinPart XI - Beaton Fitzpatrick Murray, Chartered Accountants: Gerard FitzpatrickPart XII - Producers: Eric Artz, Clayton BulpittPart XIII - Income Crisis Committee: Leza Matheson-Wolters, Jean & Earl Clark, Guy Cudmore, John Earl, Jim Doyle

Tape No. 1

Wilbur MacDonald(PC)Chair: We’ll call ourmeeting to order. Richard has some commentsthere. We’ll hear from Richard.

Richard Brown(L): Mr. Chairman, I know thefederal government is conducting, their agriculturecommittee is conducting meetings parallel to ourmeetings here and the meat packers werepresented to, they made their presentation onMonday of this week and their presentation is ontheir website and we can download them. Also aninteresting point that came out of the United Statesthis week is Tyson Meat Packers was fined $1.3billion and that $1.3 billion has to be given back tothe farmers in the United States for juggling prices.So I think we should in some way coordinate oureffort with the federal committee. I’ve been incommunications with a few of them and they’requite interested in working together on theseissues

Wilbur MacDonald(PC)(Chair): Also Alberta ishaving a committee too, I think the same time.

Richard Brown(L): Also, just one other point, Mr.Chairman.

Wilbur MacDonald(PC)(Chair): Yes, go ahead.

Richard Brown(L): An interesting set of statistics

came out this week from the provincial governmentand I commend them for doing this, from Stats.Canada. I think we all got them. Last night ontelevison it was reported that from January 2002 toDecember 2003 that crop and livestock receiptswere only down 5 per cent and 1 per cent. But ifyou look at the last quarter of last year, which isbasically the last quarter and the first quarter ofthis year I contend, is that crop receipts, potatoesare down 37 per cent from the same time last year,livestock receipts are down 13 per cent, cattle andcalf receipts which are most interesting here isdown 77.3 per cent. So there is a major, majorproblem here and the statistics are bearing thisout.

So that just leads me to my final point Mr.Chairman. Last week you ruled that this committeecannot make reports to the Legislature or notmake reports until the House opens. I’m not goingto challenge you. I respect your opinion.

Wilbur MacDonald(PC)(Chair): I know youwouldn’t. The rule is there, Richard, you found it.

Richard Brown(L): Well there’s a rule here andthere’s a rule here. But I’ll respect your opinion.

Wilbur MacDonald(PC)(Chair): Well always thelegislature rule supercede . If there is no rule there

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then we go to Beauchesne. So the rule is thereand I think we’ve got to stick to the rules or we’dbe in trouble.

Richard Brown(L): And I would concur Mr.Chairman. But that doesn’t say that at a request ofthis House that we call the Speaker to call theHouse open for a Friday morning when yourCaucus is in and our Caucus is in to table thereport. And our Caucus is willing to open up theHouse for three hours to table the report.

Wilbur MacDonald(PC)(Chair): Yeah, thatdepends on when we’d have our report ready ofcourse.

Richard Brown(L): Yeah.

Wilbur MacDonald(PC)(Chair): Yeah, that’s right.

Richard Brown(L): Thank you very much, Mr.Chairman.

Wilbur MacDonald(PC)(Chair): I appreciate that.Just a question then. How do we work with thefederal guys and people on– do we just simplydownload from . . .

Richard Brown(L): No, I think that ourrepresentative should be in contact withtheir–they’d have a person like Wayne MacKinnonhere and I think . . .

Wilbur MacDonald(PC)(Chair): Would you dothat Wayne? Do you know who that is?

Richard Brown(L): Yeah, I will give him theinformation.

Wayne MacKinnon: You have a web siteaddress.

Wilbur MacDonald(PC)(Chair): Okay. They dohave a number of people I’m sure.

Richard Brown(L): So we’ll be able to have goodquestions.

Wilbur MacDonald(PC)(Chair): I guess the firstorder is approve the agenda.

Richard Brown(L): So moved.

Wilbur MacDonald(PC)Chair: So moved. Allthose in favor say “yea”.

Committee Members: Yea.

Wilbur MacDonald(PC)(Chair): Contrary nay.Motion carried.

Today we have 12 presenters and I’m going toallow 15 minutes for each one. We just haven’t gotany more time than that. That should give usenough time anyway. If each person be right to thepoint and then we’ll ask questions and we canmove on.

We are, at the end we have Income CrisisCommittee. As I understand it, that’s a group fromthe Hog Commodity Board. We’ll allow them moretime at the end. I think everyone would agree tothat. So our first presenter is Danny Hendrickenrepresenting the National Farmers Union.Danny.? You have two people with you, fine. Fourpeople. Just pull up your chair if you wish. Wouldyou introduce yourselves?

Part I - National Farmers Union: DannyHendricken, Arnold MacFarlane, SteveMacKinnon, Kevin Arsenault

Danny Hendricken: Yes, I’d like to introducemyself. I’m Danny Hendricken. I’m district directorof the National Farmers Union.

Arnold MacFarlane: I’m Arnold MacFarlane, dairyfarmer, beef farmer, hog farmer from Fernwood.

Steve MacKinnon: I’m Steve MacKinnon a dairyfarmer, local 104 president of the NFU.

Kevin Arsenault: I’m Kevin Arsenault and I’vebeen contracted to assist the National FarmersUnion in doing some research. Actually I was aformer executive director of the National FarmersUnion.

Wilbur MacDonald(PC)(Chair): I was also aformer Chair of District, it’s 103 now isn’t it? KingsCounty. Danny Hendricken: Well I thought I was going tostart, Mr. Chairman I thought I was going to startoff these proceedings on a positive note but I’mafraid I’m lodging a complaint before we even start

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that. Fifteen minutes is totally unacceptable andit’s not an adequate enough time for us to ventsome of the concerns that we have right now.

Wilbur MacDonald(PC)(Chair): Let’s go and seewhat we do.

Danny Hendricken: Sure, thank you. Before Istart here I’d like to kind of raise a challenge to thisCommittee. As we know we’re in a disastrousstate of affairs unprecedented in the history ofagriculture within this country and the challenge isthat to this Committee make this simply not avenue for organizations and individuals to simplyvent their frustrations at the current state of affairs.We think that it’s the responsibility of thisCommittee to formalize a concise and cleardirection to give the government because thisindustry does not have the luxury of theseproceedings formulating something and sit on thegovernment archives. It has to be acted on. And ifthe government decides at that time not to actupon it, we will take it upon ourselves as one ofmany different groups here to make thegovernment accountable.

Anyway the introduction. National Farmers Unionwelcome this opportunity to make a presentation tothe Standing Committee on Agriculture, Forestryand the Environment. We know that you havealready hear a great deal about the crisis facinghog farmers, beef farmers and potato farmers. Weare certain that you know that there is anunprecedented crisis facing farmers. How cananyone not know the seriousness of the crisiswhen they hear that potato farmers are taking outadvertisements offering to give potatoes away forfree, or when beef and hog farmers are receivingpennies per pound–if they can sell their productsat all–while consumers continue to pay dollars perpound for meat at the grocery store.

You have heard countless farmers share heart-breaking stories of the hardship, stress andsuffering they and their families are facing and wetrust that you have felt the frustration and despairfarmers are feeling. You have heard the sad factsand statistics which define the current state ofaffairs facing farm families, consumers and allIslanders and we know that it will do good for us torecount those tragic figures to you again today.

The National Farmers Union is here today to talkabout the urgent need for our provincial

government to show courageous leadership inembarking on a new road for Island agriculture.We are submitting a detailed brief which is the fruitof a long process of research and reflection whichbegan last summer. The NFU contacted Dr. KevinArsenault to investigate farming and the foodsystem on PEI today and to suggestrecommendations that would address coreproblems and challenges which this research andanalysis identified. A draft report prepared by Dr.Arsenault was first distributed to NFU members forreview and the National Farmers Union then helda number of meetings to reflect on the analysisand suggested strategy contained in the draft brief.

The result is the document we are presenting toyou today, titled, “The Preferred Road for PEIAgriculture.” In the interest of time, we will highlightsome of the most important aspects of thisresearch with some explanation why it isimperative that the PEI government takeimmediate action to forge a new road withappropriate policies and programs for PEI.

OVERVIEW OF THE PREFERRED ROAD FORPEI AGRICULTURE

The document we are presenting has two parts:Part I examines agriculture and the food system onPEI with an eye to uncovering the underlyingdynamics, principles and trends which havebrought farming and our food system to our currentstate of crisis and near collapse. Part II movesbeyond the clarification of those underlyinghistorical realities and systemic factors and mapsout what a preferred road for PEI Agriculture looklike as well as what policies, programs andresources are needed to transform the agriculturalsystem. Again, it is not out intention to presenteverything in the brief, but to offer an overview thatcaptures the essential elements of both ouranalysis and our recommendations. We want toleave as much time as possible for questions anddiscussion.

Our food system in Canada and PEI has emergedover the past four decades and is bestcharacterized as an industrialized agriculture. Withindustrialized agriculture, food production isviewed as one step in an economic sector wherethe goal is to produce wealth for agri-businesscorporations. Within this approach, farmers are notviewed as the glue that keeps rural communitiestogether, but rather individual businesses which

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must compete fiercely with one another in acompetitive game of survival, with a predeterminedoutcome that the food system of processing,packaging, trading, wholesale and retail selling willonly do business with those primary foodproducers who are willing to or forced to sell at thelowest price. To survive economics of scale averviewed as necessary with farmers getting biggerand bigger and smaller family farms are deemed tobe inefficient and are allowed to go out ofbusiness.

The application of this industrial business model offood production is a disastrous consequence forprimary food producers, rural communities, thehealth of th environment, the health and safety offood, the stability of our provincial economy andthe very nature of our social democratic life. Asthe industrial model of food production becamemore entrenched over time, farms became fewerand bigger and food processors, traders, brokers,wholesalers and retailers came under theownership and control of a handful of globalcorporations. Producers and consumers are nowrealizing just how little control we presently haveover food. Governments once shared the view thatfood is simply not a saleable commodity that canbe produced, traded and sold for wealth, butrepresents a foundation of social and politicalstability and the most important requirement fornational security. This belief was formallyentrenched in international agreements such asthe General Agreement on Tariff and Trades, butno more. The new rules of the global foodtradeimposed on governments by the World TradeOrganization and international agreements likethe North American Free Trade Agreement havemade food the preferred capital of a new corporateglobal oligarchy.

What has the industrial agriculture brought us?The elimination of hundreds of Island farmers, theconsolidation of ownership and control over foodby a few global corporation and the imposition ofpay or starve pricing practices at the food retaillevel. While PEI farmers find themselves in asituation where they either can’t sell their productat any price, food retailers import beef fromArgentina which Islanders have no way of knowingit’s not Island beef. Free trade has been disastrousfor farmers throughout the world because itallowed global corporations to undermine domesticfood security everywhere to increase ownershipand control of land and food production. It has

reshaped agriculture from a way of life and ameans to provide for basic human needs into asystem that generates enormous wealth for theowners of agriculture business corporations at thesame time as increasing the poverty of bothproducers and consumers. Unlike the so-calledlaw of supply and demand which offers somethingof a self-regulating mechanism for many products,with food the situation is quite different–everyperson in the world needs to eat food every day,so demand is guaranteed.

Now that the corporations have gained such alarge degree of ownership for our food system,they control both sides of the equation: payingfarmers virtually nothing for their product on theone hand, while gouging consumers who mustpurchase food at any cost or starve on the otherhand. This situation is unacceptable, unjust,undemocratic and must be changed.

The facts on just how consolidated ownership andcontrol of the food system have become arereviewed in our brief, including information abouthow that control has resulted in a situationwhereby Canada’s agri-food export have tripledbetween 1988 and 2002, from 10.9 billion to 28.2billion, at the same time as farmer’s realized netincome has fallen by 24 per cent. StatisticsCanada data reveals that the average rate ofreturn for food processors in Canada over theseven year period from 1990 to 1997 was 11.6 percent.

Studies on the rise of food and agricultural cartelshas revealed that between 1996 and 2002, 85 percent of all fines imposed for price-fixing have beenimposed on food and agriculture cartels, with salesby members of price-fixing conspiracies for t thoseinstances that were discovered in the five-yearperiod from 1996 to 2001 totaling a whopping $76billion. Is price fixing happening on PEI? Memberof this committee need to ask whether it is fair thatconsumes must pay $2.79 for 1.3 kilogrampackage of 20 McCain hash brown patties atAtlantic Superstore at the same time as the potatofarmers either can’t sell their product at all or weare forced to accept three cents a pound just tomove them out of the warehouses onto Russianships which is approximately have the cost ofproduction and furthermore, whether it’s just acoincidence that the only choice consumers havefor a comparable product is a 1.27 kilogrampackage of 20 Cavendish Farms hash brown

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patties which retails at exactly the same price,$2.79 and it’s side-by-side McCain hashbrowns inthe same Atlantic Superstore freezer.

Arnold MacFarlane: There is no longer a law ofsupply and demand at play within the food sectorof the economy. So it is both naive and foolish tothank that by shifting from one commodity toanother or by making minor changes and furtherefficiencies, farmers will be able to get fair prices.The old age survival tactic which farmers haverelied on to motivate themselves to stay in thegame of farming, namely to hope against hope thatnext year will be the boon year that will pay all thebills and make everything right again will no longerwork. The facts of corporate control have becomeso obvious that we’d have to be completely blindnot to see that the farming game is fixed. Like aone-armed bandit at a gambling casino, agriculturei s r i g g e d t o g u a r a n t e e t h a t t h eplayers–farmers–supply all the worry and work, allthe investment, take all the risk and in the end,walk away with nothing.

The preferred road to PEI agriculture, and somewould argue the only sensible road, is to reclaimour right to determine our own food policies andpractices before it is too late. This cannot happenwithout provincial government leadership. TheNFU is convinced that farmers and consumersalike, and that means all Islanders, will throw theirfull support behind any provincial political partythat is willing to offer such leadership.

A primary responsibility lies with the provincialgovernment to design and implement agriculturalpolicies and programs to rehabilitate the farmsector, to repair and prevent environmentaldamage and to establish methods of farming thatrely on sustainable production practices. This willnot be possible unless the provincial governmentmakes a foundational political decision to reclaimcontrol over agriculture and the food system ofPEI. Reclaiming control over agriculture and thefood system will require a whole series of mutually-supportive policies and programs. These initiativeswill need to be inter-related parts of a long-termplan if we are to achieve a transformation of theagriculture and food system on PEI. They shouldsupport change in the direction of achieving threeinterrelated objectives: to ensure financial securityto farmers by stabilizing and increasing net farmincome, to increase the number of farms on PEIand make smaller, diversified farms viable and to

promote increased chemical-free farming throughsustainable agriculture. Once the key elements ofthis plan are developed on paper, they must serveas the basis for the PEI government to negotiate anew agreement with the federal government underthe terms of the Agricultural Policy FrameworkAgreement.

The recently negotiated Federal-ProvincialAgricultural Policy Framework Agreement, whichthe PEI Government signed last fall, representsthe first such agreement for PEI agriculture sincethe infamous Comprehensive Development Planimplemented in 1969. In the same way that the1969 plan provided financial resources and policymeasures to rationalize agriculture in accordancewith the industrial model of food production, thePEI government must now exert its right to accessfederal resources and supports to establish a newcomprehensive policy to reshape Island agriculturein accordance with sustainable farming, new farmmarketing programs and practices which returnmarketing power to producers and new legislationand regulations to establish transparent labelingand fair pricing polices for agri-business.

In a news release dated September 12, 2003,former Minister of Agriculture, Hon. Lyle Van Cliefindicated that the Agricultural Policy FrameworkAgreement would be renegotiated annually. ThePEI government must hold the federal governmentto honour this promise and immediately get towork on a plan to seize an opportunity which iscoming up later this year to renegotiate thisagreement so we can take significant steps towardforging a new and preferred road for Islandagriculture.

The NFU commends the PEI government for itsstated commitment to promoted food productionmethods and techniques which are essential tohealthy food production and environmentalsustainability. If efforts toward this goal are tosucceed in the long-term, however, it is essentialthat the PEI government embark on an even moreessential campaign to help farmers regain controlof the marketing of their products at a fair price.One of the first and most important steps is for PEIagriculture is to negotiate federal support underthe terms of the Agriculture Policy FrameworkAgreement to do direct marketing work with and onbehalf of farmers. To facilitate this initiative, theNFU is calling on the PEI government to establisha Provincial Farm Marketing Council to assist

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farmers to market collectively and price share andto take initiatives to develop and secure marketsfor PEI’s primary products.

This marketing council could not limit itself tomarket development and product promotion, butmust help Island farmers to establish newmarketing mechanisms to pool farm products andprice share for a wide range of farm commodities.On the other side of the equation, new legislationand regulations must be enacted to curtail thepower of food corporations, especially processors,shippers and retailers. There are obviousexamples of unfair practices at work. Forexample, beef farmers are often given poor gradesand lower prices by meat packers, yet there is noindication of lower grades and prices for meat atthe retail level.

We will conclude our oral presentation by listing anumber of recommendations contained in the fulldocument we are providing. The National FarmersUnion is asking that the PEI government adopt andbuild on these program planks with the goal ofestablishing a new political agricultural strategy.They include:

• to establish new research programs toincrease sustainable agriculture on PEI;

• to ensure that the benefits of sustainableagriculture are understood and supportedby Islanders by implemented public andschool-based education and informationcampaigns;

• to establish a land banking policy inconjunction with affordable leases tofarmers who are willing to comply with andadopt sustainable farm plans;

• to ban genetically-engineered foods; toimpose mandatory country of originlabeling of food at the retail level to ensureIslanders have a choice to buy local;

• to implement a policy that publicly-ownedinstitutions, such as hospitals, schools,cafeterias, purchase Island produced foodwhenever possible.

Embarking on a new direction for Island agriculturewill not be easy, nor can it be done without asubstantial investment. But the key word here is‘investment’. For such a courageous decision willbe an investment with a substantial return and willnot be just a short-term prop to keep a dying wayof life alive for another year. Let there be no

misunderstanding, farmers need immediatefinancial relief, but this must be part of a longer-term strategy or it will not bring about the changeswhich are so urgently needed.

The government must ask a few hard questions. Ifthis direction in not taken, what represents afeasible alternative? If these hard decisions are nottaken, what will be the true cost to Islanders to ourchildren? Is it worth risking the complete loss ofcontrol over our food system? The history ofcivilizations teach us that the loss of control overthe food system was often the last step in the longprocess culminating in enslavement and poverty.We are on this road and we are not far from thepoint of no return.

The good news is, that it is not too late to takeback the reins of control over our food system andthe even better new is that Islanders are quicklybecoming aware of the seriousness of the situationand will support the government on this issue.There is no more urgent issue facing us, nogreater legacy a government can leave than totake up the challenge and demonstrate the kind ofcourage and leadership our present situationclearly demands.

Wilbur MacDonald(PC)(Chair): Thank you verymuch. I’m going to open it up for questions.Anyone? No one?

Ron MacKinley(L): I have some questions.

Wilbur MacDonald(PC)(Chair): Okay, Ron.

Ron MacKinley(L): We have problems like in theBSE with the cow/calf operators and the beef, thefeed lots, the people that put them through andalso with the hog industry. There is a tremendoushardship there with the hog industry right now.What would you suggest the government shoulddo for–like it’s great, I know your long term plansare good but these farmers need help now. Whatwould you suggest the government, us as acommittee should recommend back togovernment? We can only recommend, say for thehog industry now, what should you recommend?What should we recommend?

Danny Hendricken: To improve the hog industry,I think the Bridge Loan Program I think has to bedefinitely extended, it can’t be eliminated here inMarch. In fact, it also I think should be increased

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the levels there whatever because I think thelevels are below the cost of production. I mean thatcan be determined with the hog marketing board.Not only that, but I think and I’ve heard referenceto the fact that our provincial government isentertaining talks with the other two provinces,Nova Scotia and New Brunswick about doingsomething like for lack of a better word single deskselling or block selling. This would probablyencompass something like setting minimum prices.That’s got to be established right away.

The hog industry, for instance, is the perfectexample of what is wrong with agriculturethroughout this country and globally really. I’venever seen such better description of amanipulation by a certain few players, and again,than in any other sector of the economy here. Idon’t know how hog farmers have stayed in thegame as long as they have. We’ve got to get ourheads around the fact that the only way we’re evergoing to address this is some kind of control interms of production with minimum price setting.For lack of better words, it’s supply managed in thehog sector. Until you get that, what you’re have todo is it’s important that we have the threeprovinces grouped together instead of havingaccess to 240,000 hogs that would then have todeal with an area that controls 600,000 hogs. Itwould have to be that they couldn’t play oneprovince off against the other. McCains, who arethe main player here in terms of hog processing,would have to deal with all three provinces on anequal basis.

Ron MacKinley(L): Now the hog producers havebeen before us, said the loan program was goodwhen it started out. But the problem is now, there’sbeen no up years. So when they go to their banks,the banks are looking at you owe 40 or 50,000here, so they take that as a debt and they’re alsogoing behind on their own business even with thathelp. So what would you suggest should be donefor that–like the loan program is basically, if you gobelow a $1.60 is it?

Danny Hendricken: $1.40 I believe.

Ron MacKinley(L): $1.40. The government givesyou a loan but you still owe that money, in otherwords you still owe that money and there hasbeen no cycle there to get them over that hump. Ifyou go back over the history of the hog there usedto be a cycle where it would pick up.

Now what should we be doing on this? I believe itis up to around three million. I know thegovernment was going to extend the program. Butit’s still not an answer to the problems we have inthe hog industry here. We lose the hog industry,we lose Garden Province Meats, we lose all thosegood jobs out there and they’re good paying jobstoo plus we lose the plant. So what would you asan NFU recommend to us? I know your supply andmanagement and everything but that could takeyears to get that through where the governmentsget together. Where we need is something forthese hog farmers, I think myself personally, I’monly on the committee, we need something beforeApril because what’s going to happen is these hogfarmers are going to have to start putting in crops,they’re going to have to start, a lot of them growgrain and that and that takes money.

So what would you recommend to us as an NFU?Would you recommend that that money should besaved, wrote off –that $3 million or would yourecommend that–it’s all right, but it’s still a loan.When you go to your banker, your banker islooking at you and saying well, I’ve got this moneybut I owe it. Still it’s a debt. So what would yousuggest That the government come out and takeshares in their farms or something or . . .

Danny Hendricken: The government only hasvery few options. Until we enter into a supplymanagement situation here in this country, you’regoing to have to continue to keep firing moneyinto the hog industry through bridge loans. That’sthe only thing that you’re going to do. For instancethe hog industry in terms of processing is soconsolidated you only have a couple of playersthat are involved and they’re becoming morevertically integrated every day and you have torealize exactly where they’re coming from. Theyare not going to be satisfied until they eithercontrol or eliminate hog production in EasternCanada.

Ron MacKinley(L): But you’re talking about thesebridge loans, but the hog producers have alreadytold us that bridge loans aren’t working.

Danny Hendricken: Well you’re going to have tosimply write off the debt, that’s what you’ll have todo.

Steve MacKinnon: One option might be and Idon’t know what to do with the past debt but for the

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interim is, if they’re getting say $1.15 and the costis $1.40 well then I guess the government will haveto come up and make up the shortfall until theblock selling and all that takes place. Also then,you’d have price sharing. Like what Danny wasreferring to is the three provinces get together andall hog producers throughout the provinces share.You don’t pit one province against the other or onehog farmer against the other. You get the bestprice you can and then whatever your downfall isI guess governments will have to come in at thistime and shore them up to the cost of production.

Ron MacKinley(L): Like I know the government,you said they only have a few options, well theyseem to have a few options for certain people butwhen it comes to the general public they don’t.For instance, Lanks Farm Incorporated, I believethe government–you’re all familiar with that loan,$1.2 million or something that they got through theImmigrant Investor Fund and they were suppose tocome up with 20 per cent down payment whichthey came up with nothing–and then when the loancame due it looks like the PEI Lending Authoritytook out shares in the farm. So that’s probablypreferred shares to the tune of 49.5 per cent I’mtold.

Unidentified Guest: Yes, it was preferred sharesI think it was, Ronnie. (Indistinct)

Ron MacKinley(L): Yeah, that’s the same as theygave Polar. Polar got $7 million preferred sharesand they don’t write them off, they get anaccountant in to value them, they’ll just call it,they’re not worth as much. Same language wrotedown or wrote off. I don’t know how this loan is(indistinct)

Arnold MacFarlane: It’s a euphemism for a writeoff. Whatever gets the hog producers throughbecause the Tories put that big hog plant in andwe all used to believe bigger is better. Speaking asa hog producer, bigger is not better. Better isbetter.

Ron MacKinley(L): Yeah well.

Arnold MacFarlane: I mean . . .

Ron MacKinley(L): We found that out about fishplants too, didn’t we.

Arnold MacFarlane: I’m clearing $79.35 a pig,

clearing, after all my costs. Where is all that moneygoing? Well the province never wanted to look atthe alternative. They wanted to put everythingthrough that plant and do everything the easy way.Well you’ve got to write off the debt or you’ve gotto write off the hog producers. Which is it going tobe? Call it preferred shares, I don’t care what youcall it.

Tape No. 2

Ron MacKinley(L): I was just wondering that if wecould do the same deal that they did for Lank FarmIncorporated, which was Lank Farm Incorporatedlooks like the PEI Lending Authority as ashareholder and I’ve been told that it was 49.5 percent. The farmers still own the farm. They stillhave major control and if those shares in yourcompany have any value it would probably getwrote off.

Danny Hendricken: Well I think, Mr. Chairmanthat....

Arnold MacFarlane: That’s for the House. Youcan discuss that.

Ron MacKinley(L): Well we got you here now andyou guys are before us and I’m talking about thebridge loans like for instances if there is $3 million....

Wilbur MacDonald(PC)Chair: ...let the gentlemananswer your question there.

Steve MacKinnon: I think, Mr. Chairman I don’tknow what we can do with the past that has beendone but I think what immediately has to be put inplace, is these hogs that are being sold aren’tdumped out on the street, they are beingconsumed so we know that there is value in itsomewhere. So until such a time that the provincialgovernment or them in the federal could acttogether, those farmers will have to be paid thedifference between what they are getting and thecost of production. And I don’t think taking outshares on the farms would be, like that wouldn’t bethe way to do it.But just basically top up whatever it’s been.

Danny Hendricken: Mr. Chairman, it’s been welldocumented here. There’s lots of money in thesystem to pay farmers adequately and consumersdon’t have to pay one cent more. For instance, I’ll

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give you a perfect example. One of our membersa number of months ago sold a hog to GardenProvince Meats, they received just under $120 forthat 180 pound carcass of pork. They went toSuper Store that afternoon, did the dissecting, tookinto consideration the difference prices on thedifferent pork cuts and the retailer was charged forthat same pig, he got paid $120 for that morning,$434.

Wilbur MacDonald(PC)Chair: Well we had aletter from a gentleman who sold one for 98 andhe went to the retail store and it was 600 andsome dollars. And I think you--.as far as I’mconcerned you hit the nail on the head. That’swhere the difference is.

Danny Hendricken: Anyway, what happens is likethere is a minimum of $80 that could be sent backto the farming whatever so instead of getting a$100 a hog there’s no reason why to take intoconsideration inflation and everything else, hecan’t be paid a realistic price of a $180. Putting$80 of hog more into the provincial economy wouldprobably in today’s productions that we have,probably $24 million a year that is being extractedout of the local economy here and sent toshareholders in Toronto or Calgary or whereverthey may be.

Now this government if it was serious and if itthought there would be political fallout, it has IRACin there to regulate prices of--through fuel toconsumers. Consumers are getting gouged by theinsurance companies. They took unprecedented inthe history of this area wherever to put this undergovernment control because the general publicwanted it. Now there is enough money in thesystem there to pay the farmers adequatelywithout the government--without the consumers ofthis country or this province paying one cent more.If this government was really serious about it, theywould get some kind of an investigative committeeor commission together to investigate why theMcCains of this world can’t pay the produceranother 50, 60, $80 a hog more and justify it.

Steve MacKinnon: We have them coming in.

Wilbur MacDonald(PC) Chair: Well that’s why weare trying--we are going to try to work with thefeds. With the federal department...agriculturecommittee who is doing the exact sameinvestigation as you are talking about, is that we

want to know about too. So before we are done ofthis here, we are going to meet with the HogCommodity group, with the processor, with theretailers and we are going to try our darnest to findout where this money is going. We may not do thatbut we are certainly going to try, and I think that’sa very important part of our committee.

Steve MacKinnon: Another thing, Mr. Chairman,too is when you see the amount of profit thesecorporation are making, maybe one simple way forthe government to do it and to save the taxpayersmoney is to start taxing the way they should be.We’ve seen how over the years corporate taxesreally haven’t been reduced compared to personaltaxes. Maybe that (Indistinct) should be changed.

Wilbur MacDonald(PC)Chair: I think ourcorporate taxes is higher than most provinces.

Steve MacKinnon: But even so I mean if they aremaking that kind of money and they shouldn’t beallowed to take their money off Island and hide inoff shore accounts or whatever if they are up tothat. It should be paid where the product is beingproduced and consumed.

Wilbur MacDonald(PC)Chair: Okay, I’m going tohave cut us off here. One request I’m going tomake of you is, is Mr. Arsenault available to thiscommittee for private consultations and so on?

Steve MacKinnon: Yes.

Wilbur MacDonald(PC)Chair: And I wouldsuggest that Mr. Arsenault that you meet with Mr.Wayne MacKinnon and have a good discussion onyour--you are calling it the Preferred Road for PEIAgriculture, the brief. And we’ll have thatdiscussion then given to us at a later date as itmay be necessary to call you back.

We thank you very much for taking the time and--to be here today. You were very informative andwe appreciate . . .

Steve MacKinnon: Did all the members get acopy of our brief?

Wilbur MacDonald(PC)Chair: Yes I think we allhave received a copy. No, okay, I’m sorry.

Steve MacKinnon: You can down load it off ourwebsite there too, but there’s some really good

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reading in that.

Part II - John Earl, Eastern LivestockEquipment

Wilbur MacDonald(PC)Chair: Our next presenteris John Earl, from Eastern Livestock Equipment. IsJohn here? There’s John coming. I thank youvery much again for coming and taking your time.As soon as we have the--passed around, Sir, wewill ask you to start. You represent EasternLivestock Equipment?

John Earl: Yes.

Wilbur MacDonald(PC)Chair: Which is a farmequipment company.

John Earl: In East Royalty.

Wilbur MacDonald(PC)Chair: In East Royalty,right, okay. Earl go right ahead or John, sorry.

John Earl: Thank you for your time. My name isJohn Earl. And as well I am a hog producer, I havean outside job at Eastern Livestock Equipment andmaybe that right there will tell you something thatis going on. I’d love to stay at home and take careof my animals, but I can’t afford to.

Anyway, the term “economic spinoff” has beenmentioned many times in reference to howagriculture contributes to the economy and wellbeing of our province.

Eastern Livestock Equipment, it’s a bricks andmortar type example of the term “economicspinoff”. It’s a real business. Our company hasbeen established in East Royalty for the past 12years and our focus is mainly on livestockequipment, housing equipment. We sell thingsyou’d find in a barn, like penning, barn ventilation,grain storage, we don’t sell tractors and that typeof equipment. We are more in-barn.

We work out of a company owned premises inEast Royalty. We pay taxes; we pay water andsewer bills. I’m just trying to get across thiseconomic spinoff idea. We employ five people fulltime and when I say full time, there’s no layoffs.It’s year round work. They are well paying jobs inthe range of 25 to $45,000 a year. Those peoplepay income taxes. They purchase goods in theircommunity and we also provide installation work

for two subcontractors we work with quiteregularly. We will sell the equipment; they put it infor us. There’s a lot of employment spun out of thissmall little business. We sell to all agriculturalsectors, we do sell to dairy people and beefpeople. We tend to focus on the hog industry. That’s where we did put our focus and that’s whywe are here today.

Sales to hog producers, they make upapproximately 60 per cent of our annual sales. Forthe year ending 2003, we were down 40 per cent.We can’t sustain that. Out of those five jobs, I’dsay two of them aren’t going to be there if thiskeeps up. And then the other three won’t be thereand I won’t have a job and I can’t make it on thefarm, you know it’s just a downward spiral. It’s vitalto our business and that’s why I’m here. I know I’mwearing two hats, I’m a producer but I’msupporting the rest of the producers that supportmyself and the people that work there and allthese people do, okay.

And without a healthy hog industry, our businessis in jeopardy and we urge you to support andassist hog producers and in doing so support thepeople that we employ in our business. And webuy fuel from the Irving’s like I said we pay taxes.All our trucks are fixed at Brown’s Auto. I can goon and on and on. The money starts right here, butit flows throughout. It’s not 15 minutes, and I justwant to let you know what they do for us.

Wilbur MacDonald(PC)Chair: Any questionsmembers? Richard Brown.

Richard Brown(L): Thank you, Mr. Chairman.You’ve indicated business has been effected andthis year is worse.

John Earl: We are down 40 per cent. Our yearends November 30th, and we are down 40 per centand that’s–people aren’t coming through the doors.Nobody has any money to buy anything. Ourreceivables are extended and how do you dealwith somebody who has been--it’s a small Island.They’re friends as well and they’ve been payingyour 30 days and now they are paying you 90 daysand you have to say we need the money, you don’twant to be--it’s just making it really difficult. Andpeople aren’t coming through the door and whenthey are coming through the door, hog producerswill tend to maintain their buildings and they willspend money. It’s more of a turning business cash

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wise, they have to maintain buildings. I knowpeople aren’t maintaining them any more. It’sgoing to effect them back on the farm.

The answer, Richard, is business is down 40 percent.

Richard Brown(L): And this year looks worse.

John Earl: Yeah if we have another year like this,hog farmers on PEI and myself included will begoing to the mainland to buy equipment; and fivepeople will be out of work; and the taxes wouldn’tcome out of the building et cetera, et cetera.

Wilbur MacDonald(PC)Chair: Wayne first andthen Ron.

Wayne Collins(PC): Thank you. A short questionMr. Earl. It’s a question I know is probablyapplicable to anyone presenting here today. Doyou feel that if the proceeds you know, the enduse–if it was all thoroughly allotted along the chainof production from the hog barn to the processingplant, to the supermarket, to the backroom of thecutting floor, right out to the retail shelf, to theconsumer, if that was all fairly allotted along thechain and obviously, I think a lot of people think itisn’t being fairly allotted, would there be any needfor this hearing today? Would there be any crisisin our meat industry whether it’s for beef or forhogs?

John Earl: The obvious answer is no.

Wayne Collins(PC): There’s something wrong inthe chain. I mean if we are paying x number ofdollars for a pork roast and as we’ve heard beforeyou know but when it left the farm, it didn’t havethat kind of value attached to it.

John Earl: No, it didn’t and all . . .

Wayne Collins(PC): And all along the waysomeone has been making what we wouldnormally expect and right, would be a modest, fairprofit.

John Earl: That’s a fact.

Wayne Collins(PC): So here we are. We areasking government intervention at all levels be itfederal or provincial. Government is assisting inways that it can and try to afford, but the bottom

line is somewhere along the road here, somethingis amiss badly in this.

John Earl: I agree. I agree and I’d like to also add,that’s for long term consideration. The peoplebefore me and Ronnie had mentioned, our electiverepresentatives and the government have to getcash into hog farmers’ pockets. And I don’t mean,with no disrespect, Mr. Collins, I don’t mean sittingup a federal task force, a slash federal/provincetaskforce to investigate the chain who makes themoney and who doesn’t. That can be done but youare talking 36 month, 48 month, 60 month project.These things don’t happen overnight. I just like toemphasis, get some money into producers’pockets or the crunch is going to come and all thisdiscussion will be moved. There wouldn’t be anyproducers around. I do agree with you. Thankyou.

Wilbur MacDonald(PC)Chair: Ron.

Ron MacKinley(L): Yes, you mentioned aboutyour business being down 40 per cent, andaccounts getting out longer. I had a phone callfrom--one of the areas that has really been hit Isee is feed companies.

John Earl: Is what?

Ron MacKinley(L): Feed companies.

John Earl: Oh desperately.

Ron MacKinley(L): Because maybe they don’tbuy from your company but feed companies got togo out every week to fill the hog feeders and I had--actually I had a feed operator, person own a feedcompany phoned me and he’s extended to thebank as far as he can go and how do you say tocustomers that have been paying you within 30days or 40 days that they can’t have any credit andall of a sudden they hit a bad turn and there’s sixpeople working at that mill, plus the farmers thathe owes for barley, you know, he has contracts tobuy barley in. The farmers he has in that, there’sjust a continuous domino effect. And you aresaying what I noticed the other group were goodbut they are talking long term, it could take twoyears when it gets into government.

John Earl: Which is fine.

Ron MacKinley(L): That’s good, good idea, but

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what we need is money in the farmers’ pocketsbefore April cause they have to start planting inMay. Some of them plant the 20th of April downeast and that’s where I see the major plus we needenforces of cash into their pockets in order forthem to--they are never going to get their bills upto 100 per cent but maybe they will get half ofthem paid. At least the feed company gets anextra . . .

John Earl: Maybe I can just--we are all laying ourcards on the table and I’ve said it before, I’m halfembarrassed to be down here. I’m not really apublic person. My wife and I owe a lot of moneyon our feed bill. The company that carries the feedbill is behind me. If I get money from you, it’sgoing right to them and the only reason I’m here isbecause they are carrying me and I don’t likebeing carried, and we are at our wits end. We justdon’t know what to do.

Wilbur MacDonald (PC) Chair: Thank you verymuch, sir for coming and taking the time to cometoday and we appreciate very much your remarks.

John Earl: Thanks for listening.

Wilbur MacDonald(PC)Chair: Thank you verymuch. Is Kensington here, Kensington AgricultureServices Ltd? There he is. How are you, Doug?Go ahead, sir, and you read your brief and then wemay have some questions for you.

Part III - Kensington Agricultural Services Ltd:Doug LeClair

Doug LeClair: Okay, it will be brief. Thank you,Mr. Chairman. My name is Doug LeClair. I havemet most of you in a previous life. I appreciate theopportunity. I’m here today as a representative ofKensington Agricultural Services Limited. A locallyowned full service farm equipment dealership thatwas founded in 1983. Covers most of PEI in itsterritory, 95 per cent of our business is fromprimary agriculture producers on PEI. Currentlythere are 25 full time employees on staff. In peakseason, it can extend to 30, four or five seasonal.The payroll in 2003 was $1.05 million. In additionto that and I didn’t break this down into a lot ofdetail but we do spend a lot of work off to localbusiness, be it welding and constructionfabrication, fuel companies, et cetera.

In talking--I spent seven years with that company

till the year 2001 and then I was away for threeyears and back and the original owners are still theowners today and some of the employees havebeen there for the term of the company as well. Intalking to some of those people, it’s the first time inthe history of this company that the current pricesituation is so far extended. Usually diversificationif hogs were poor, beef would be better or potatoesbut when you look at hogs, beef and dairy andpotatoes today most of our client bases certainlyfeeling the pinch.

That extends to not only our company but being sodirect towards agriculture we see a reduction inbusiness volume. We see an extension inaccounts receivable, an increase in paymentdefaults and result in repossession. In the shortterm, the ownership has made some decisions toscale back what they had planned in 2003, a majorrenovation of facilities for this year that probablywould of been a six figure renovation has beenscaled back to very minor, probably a four figurerenovation actually. In regards to the future, youtalked to the people that have been there for 20years; they have seen ups and downs. They willhave to continue to go forward but certainly it’smuch more cautiously then it would of been.

So in closing, the gross strengths and futureviability of our company is directly linked to astrong farming industry and we ask that thiscommittee and our government carefully considerindustry proposals that in this particular case todaywill be–is being developed and brought forward bythe Hog Commodity Board and that you take everypossible step to help producers get through thisexisting crisis. After all, a strong agriculturalindustry benefits all Islanders. That concludes mypresentation, thank you. Any questions?

Wilbur MacDonald(PC)Chair: Any questions?No questions. Ron.

Ron MacKinley (L): Out of the company’s, do yousee any layoffs or anything coming to yourcompany because of this crisis?

Doug LeClair: It depends. Certainly I think, Ron,it’s naive to say that if this current situation inpricing continues through the first quarter into thesecond quarter, you know I think some of thosethings are going to have to be considered, as ofthis time. In the seven years that I was there Idon’t recall any layoffs. That would be one of the

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last things that the ownership would want to do butif it continues, at some point it will probably have tobe addressed.

Ron MacKinley(L): Any your company took overin what year?

Doug LeClair: The company started in 1983.Twenty-one years old.

Ron MacKinley(L): 1983 and is that like theQuebec, not Quebec, what was it? Campbell andBurns. Did you people . . .

Doug LeClair: No, in the 90's then, it was boughtout by Campbell and Burns.

Ron MacKinley(L): Bought out. AcquiredCampbell and Burns out of Bedeque too.

Doug LeClair: Since merged the operation ....

Ron MacKinley(L): And those jobs all went up toyour company up there, alright. You guys merged,Ford and some other company.

Doug LeClair: Yes. Several lines. We do have alot of lines which tends to add to diversity which isgood but then when the industry is hit across theboard like this, it certainly impacts everything.

Wilbur MacDonald(PC)Chair: Any morequestions? Okay thank you very much, Doug. it’sa pleasure to see you again. Okay we haverepresentatives from the feed companies. Is thisthe one we have to have tabled or more chairs?One, two, three, four, five, six. Why don’t we get,John, would you sit back... could you fellows sit inthe second row and let the chairs come up front?

Who is going to speak first? You are, sir. Wouldyou introduce yourself and the rest of the peoplewith you, please?

Part IV - Feed Company Representatives: John Scales - Phillips Feed Services; Mary VanDen Broek-Grant, Cardigan Feed Services; EdDoyle, ShurGain Feeds; Shawn Kerry, AtlanticFeeds; Dominic Johnson, Balance It Inc.; RonGamble, Co-op Atlantic; Bernard Jay, KensingtonCo-op; Alan Livingston, Agro Co-op.

John Scales: Thank you, Mr. Chair. My name is

John Scales, from Phillips Feed Services. I askedthe other people at the front to identify themselves.

Mary Van Den Broek-Grant: I’m Mary Van DenBroek and I work with Cardigan Feed ServicesLimited.

Ed Doyle: Ed Doyle with ShurGain Feeds.

Shawn Kerry: Shawn Kerry with Atlantic Feeds.

Dominic Johnson: Dominic Johnson, I’m withBalance It Inc.

Ron Gamble: Ron Gamble, Co-op Atlantic.

Bernard Jay: Bernard Jay, Kensington Co-op.

Alan Livingston: Alan Livingston, Agro Co-op,Charlottetown and Montague.

Wilbur MacDonald(PC)Chair: Okay, go aheadsir.

John Scales: Mr. Chair, we thank the StandingCommittee for the opportunity to make thispresentation today.

The Prince Edward Island livestock feed industryhas operating facilities across PEI including inSouris, Cardigan, Charlottetown, Cornwall,Ebenezer, Bedeque, Kensington, Summerside,O’Leary and Tignish.

The feed industry is a major buyer and user of PEIgrown grain. We directly employ over 80 Islanderson a full time permanent basis with a payroll ofover $2.5 million.

The main product that we supply is grain andprepared feed to the PEI livestock industriesincluding hogs, dairy, beef and poultry. We alsosell related farm supplies such as crop seed.

The PEI hog industry has suffered throughexceptionally low prices and returns over the pastfive years. There has been very little opportunityfor recovery during this time. This has taken adevastating toll on the net equity, financial stabilityand future of this industry.

We are concerned that the depth of the hurt anddespair in the hog industry has not yet been fullyrealized or understood. We are also concerned

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about the serious effect it is having on our industry,other related businesses and the overall effect onthe PEI economy.

The PEI hog industry consumes approximately50,000 tonnes of cereal grain annually, which isabout 30 per cent of the total volume that is grownon PEI. It also consumes about 40 per cent of thetotal amount that is fed to livestock. Therefore, thehog industry is vitally important to the PEI grainand protein industry and to other sectors such aspotato growers that produce grain in rotation andas a cash crop. Hog manure also is a majorprovider of organic fertilizer for PEI crops.

The hog industry is extremely important to the PEIfeed industry due to its large consumption of feed,seed and other supplies. The main sectors of PEIagricultural industry and hogs, dairy, beef, poultry,potatoes and grain. If the hog industry is notsupported and is allowed to disappear, diversity ofagriculture in PEI is decreased further. Every farmthat is lost is never replaced. Every hog producerlost is less volume to the feed industry. This makesthe feed industry less efficient, which can lead tohigher costs for the farmers who remain.

The feed industry generally supplies feed to hogproducers on an unsecured (or open credit) basis.When an operation gets into financial difficulty, thecreditor often exposed to potential losses is usuallythe feed supplier. Hog farm closures have alreadyresulted in direct financial losses to the feedindustry with the threat of more to come. If thefarmer cannot supply the staple of feed or grain totheir hogs, then the farm is in jeopardy of closingwithing a matter of days, as animals require foodto survive. It places the feed supplier in a verydifficult and heart wrenching position.

The feed industry has already been exposed to adecline in sales due to depressed returns on thefarm. The pressure on our accounts receivable istremendous. We are forced to review the futuremeans of our operations in view of the situation.

The PEI hog producers are efficient producers.PEI hog producers have invested millions ofdollars in the past ten to 15 years to enlarge andmodernize their facilities. This investment wasmade to be more efficient, more competitive and tocomply with environmental regulations.

Countries who are leading agricultural producers

support their agricultural industries throughgovernment financial assistance on an on goingbases. PEI hog industry requires similar support offinancial assistance to be competitive and toremain in existence.

PEI hog producers deserve and need to be on alevel playing field to secure a future for the PEIhog industry.

Dominic Johnson will speak.

Wilbur MacDonald(PC)Chair: Okay. Any otherpeople who would like to speak, they may speaktoo. Go right ahead sir.

Dominic Johnson: I will take a little bit of adifferent slant. We jointly prepared some of thematerial that you already heard. But I wanted toappear here, to try to present a more personalslant on the situations as they are occurring out inthe industry. So I will start with the presentationthat I have here.

My feed company is an independent business. Ithas been in business for only a short period forabout three years. I have worked with the hogfarmers in PEI for 25 years. My initial work was asanimal nutritionist with the province. In recentyears, I worked with the PEI Hog Board and Istarted my own business. Most of the feedmanufactured by my company is sold to the hogindustry.

The low prices in recent years and in particular thelast few months has placed my company injeopardy. A hog farmer with 200 sows, just to giveyou the magnitude, uses about $30,000 worth offeed a month. When farmers fall behind in theirpayments for just a few months, the amount ofreceivables and this was already referred to,becomes substantial. This in turn creates majorfinancial problems for feed companies. With eachpassing month of depressed prices, there is anincrease in the amount money owed to the feedindustry by hog farmers.

A small feed company like mine can not withstandan accumulation of receivables. On a personalbasis, you may want to help the hog industrythrough tough times but from a businessperspective, you cannot afford to keep financingfeed without assurance of being paid for the feed.My company, and it appears other feed companies

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as well, are extended to the limit of their financingfor hog feeds. Nobody wants to see it happen butit could happen in the near future where feedcompanies may just be forced to stop deliveries offeed to certain farms. Without feed, the situationon a hog farm would quickly lead to a series oftragic events.

Receivables for feed are not secured so if the farmdeclares bankruptcy the feed company has littlechance to collect the money. The companies thatI purchase goods from expect payment in about 30days. The banks are not prepared to increase myline of credit, particularly, when my bank manageris aware my problems with finances is due to hogfarmers not paying their bills. So it is pretty selfexplanatory.

The situation, I’ve been around the hog industry forquite a while, you know, it is more serious thanwhat people realize. I have attended some of themeetings here with the Standing Committee and Italk to people and I just don’t think the hurt andgravity of the situation is getting out and I don’teven know if it’s getting across to the members, Ihope it is but I sort of wonder sometimes. There’sdifficulties everywhere like there’s difficulties withthe beef and the potato industries but from theconversations that I have, I think the hog industryis in worst shape than the other two.

The hog industry, members, I’ll let the membersknow, the hog industry is really wavering, and Iwould like to use this analogy. The industry is likeHumpty Dumpty on the wall. If financial assistanceis not secured and the industry is allowed to fall; allthe ministers and all the ministers’ men will neverput the hog industry back together again.But that may be funny, but it took a long time forthe hog industry to get to this stage and if thingsjust fall off in the next four or five months whenpeople go out of business the way things arestarting to shape up well I don’t know how you willget it back together.

There is an aspect of this whole dilemma in thehog industry that I find emotionally disturbing justtalking to, because I have known a lot of thefellows for the 25 years that I’ve been aroundworking with them. They are had working, honestpeople. They cannot pay their bills because offactors beyond their control and the factor is hogfarmers are not just paid, not paid sufficiently fortheir hogs.

In closing, I want to leave this message with themembers. Listen to what the hog farmers aresaying. Llisten to what they are requesting. Likethey will be coming on shortly and I think it’sprudent that members listen to what they aresaying particular because there’s been meetingswith some of these people now for the last three orfour weeks. They have put a lot into it and I thinkwhat you have to do is from the members of thiscommittee is strive to find and recommend afinancial package that will allow these hog farmersto survive in the short term and allow them tocontinue as a vital part of the Prince Edward Islandeconomy. Thank you.

Tape No. 3

Wilbur MacDonald(PC)Chair: Anyone else like tosay a few words or we open it up for questions?Any questions by the members? Ron and then . ..

Ron MacKinley (L): We have had goodrepresentation of all the feed companies and I didhave a phone call from a certain feed companywhich (Indistinct) and was really having problemswith his, as I mentioned, his credit beingextended at the bank plus his extended credit tothe producers and as he said how do you say noto people that you have built your businessaround.

What do you people think, now we got some of theprobably top business people here in the provincein front us and in order to start these business, asI’m familiar with your businesses, what do youthink should be done for the immediate future?Now I know there is long term plans andeverything but that could be a year or two yearsdown the road. I don’t see many hog producersleft, if we go that long. What do we as government,our committee, should recommend, we can onlyrecommend to government or to the LegislativeAssembly which approves it, got to approve it andthen it recommends to the government. Whatshould be done in the immediate future or when doyou think something should be done? And whatshould be done? Start with you Mary.

Mary Van Den Broek-Grant: Okay. Thank youvery much. I think that government will hopefullyfollow the direction that is going to come from thehog producers here this afternoon and follow themclosely. They’ve been look at for a long time and

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they are very important.

Ron MacKinley (L): The hog producers have aplan for us later on.

Mary Van Den Broek-Grant: Yes.

Ron MacKinley (L): And do you people agree onthis plan if it’s activated it will work? Are youfamiliar with the plan the rest of you? Alright.

Wilbur MacDonald(PC)Chair: Any otherquestions? Robert, sorry.

Hon. Robert Ghiz(L): John you mentioned thatthere is a lot of pressures on accounts receivableright now. I’m just wondering, to put it inprospective, comparison to other years, is it 10times worse or 10 per cent worse?

John Scales: I can’t really put it in to numericalterms very easily but it certainly substantiallyworse then it would be in a typical year in thepast. It’s hard to quantify it.

Hon. Robert Ghiz(L): But it is worse this year thenit has been in previous years.

John Scales: Significantly, yes.

Hon. Robert Ghiz(L): Another question. Just , themajority of your business do you sell to PEIproducers or do you also sell to producers from themainland?

John Scales: Ourselves, just on PEI.

Hon. Robert Ghiz(L): And are there feedproducers from the mainland selling to PrinceEdward Island?

John Scales: Yes there are.

Hon. Robert Ghiz(L): There are.

Wilbur MacDonald(PC)Chair: Any otherquestions?

Ron MacKinley (L): I have another one. Ifsomeone else wants to go ahead of me it’s okay.

Wilbur MacDonald(PC)Chair: Go ahead, Ron.

Ron MacKinley (L): Also John, when we’ve gotyou here, we’re talking hogs, but what about thecow/calf operators and the feedlot operators, howis that situation as far as your accounts go? Cananybody elaborate on that?

Dominic Johnson: In my case it’s not really a bigfactor but you got to realize about 70 per cent ofthe feed that I make goes to the hog industry. Soit has quite an impact in that respect. For the beefcow thing, not in my case anyway.

Unidentified Member: All the producers arehurting.

Ron MacKinley (L): All the producers arehurting, because you people know because you’rein the barley or you are mixing it or whatever,concentrates in the cow rations whatever, the beefcattle rations.

Dominic Johnson: I just didn’t get a chance toanswer your question. I think from the discussionsI had there is no doubt–just to leave it–there hasto be an injection of money somehow in the nearfuture. There’s no doubt about that.

Ron MacKinley (L): So what you’re suggestingis that our committee here should, and I think it isonly answer myself, but you got to go along withthe committee what the recommendations are, butI think the hog farmers need an injection of cash orcheque fairly shortly before April, my opinion. Because I’ve travelled my own community whereI represent and across the province I’m hearingthese horror stories and I mean we’re in a reallybad situation and this bridge loan program for thegovernment, and I talked to many producers andI’ve also talked to some bank people, and theproblem with that is the money is still owing sowhen they go in to look for extra operating capitalit’s a debt. Whether it’s a debt to the province orwhether it’s a debt to–those people still owe thatmoney and I believe it’s roughly $3 million orsomething. And also I have a lot of peopleworking in my riding that work at Garden ProvinceMeats in here and I mean we don’t want to losethat plant after all the dollars that we did put in onboth governments on that plant and those aregood paying jobs and we got to remember that thetruckers and everybody else, there is atremendous spin off here.

So I hope that the committee will recommend that

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the hog producers be cut a cheque sometimebefore April to the House. I believe the House issupposed to be going back in, Mr. Chairman, inMarch is it?

Wilbur MacDonald(PC)Chair: I haven’t heard aword, a date yet.

Ron MacKinley (L): Well Mitch Murphy said he’dbring the budget down.

Wilbur MacDonald(PC)Chair: Yes.

Ron MacKinley (L): Is Mr. Murphy on thiscommittee?

Wilbur MacDonald(PC)Chair: Yes.

Ron MacKinley (L): It’s funny he’s not here. Hehasn’t been here since the first meeting. Funny hehasn’t showed up since.

Wilbur MacDonald(PC)Chair: Is it fair to say thenthat most of your customers are the hog industryby far.

Unidentified Member: (Indistinct) .

Wilbur MacDonald(PC)Chair: In every one,okay. Richard you have a question?

Richard Brown(L): Mr. Chairman in 1999,December 1999, there was a report done by anAgriculture Forestry and Environment Committeeat that time, a Standing Committee, and thereport said at that time. Report on farm crisisDecember 1999. And one of the recommendationsof the report was that government investigate fromthe producer to the consumer chain, all throughthe chain what can be done here and what are thedifferent stages and that. Have you people beencontacted since 1999 to have input into your link inthe chain and how it effects the chain? Hasanybody? None of you guys have been contactedby government? So this report basically, none ofthe recommendations have been followed of it.

Ron MacKinley (L): That was a report done bythe Agriculture Committee. Norman MacPhee wasthe Chairman. It went to the House, the Houseapproved it and then it went on the dust shelf.Exactly where it went. Same with all these reportsdoing and that’s why we got to make sure–I

brought that up and there was all kinds ofmembers sat here and never raised a questionabout it. Just sat on the dust shelves. And all thosepeople came in and gave all their time at that timeand we are still back her. So let’s hope, Mr.Chairman, we get something done with you asChair.

Wilbur MacDonald(PC)Chair: Thank you. Wethank you very much and we appreciate you takingthe time to be here this afternoon.

Part V - Financial Institution Representatives:Paul Moffett, John Hutchings

Wilbur MacDonald(PC)Chair: Our nextrepresentatives are the representative of thefinancial institutions. Okay, would you firstintroduce yourselves and then if you got astatement to make.

John Hutchings: Sure.

Wilbur MacDonald(PC)Chair: And you go aheadand do that. Whoever is going to.

Paul Moffett : Mr. Chairman I’ll first introducemyself. My name is Paul Moffett . Today I amrepresenting the CIBC. I come to you both as abanker and a producer actually. At the end of themonth of March I will be returning to our hog farmin southern New Brunswick so I do have aninvested interested in the hog industry.

John Hutchings: My name is John Hutchings, Iam District Manager of the Farm Credit Canadahere on PEI.

Paul Moffett : The CIBC was approached by localproducers to speak to ( Indistinct - Audio Problem)chartered banks to express our concerns andsentiments surrounding the current state of thehog industry. I’ll attempt to express that opinionnow and I will try and keep it as brief as I can.

Not unlike the many agricultural industry playersthat you have heard form or will hear form today,the Banking sector is being affected by thisexceptionally long low period in the hog pricecycle. Bank hog loan portfolios are becoming ofhigher risk with every week that prices that arebelow the cost of production.

Traditionally on Prince Edward Island the bulk of

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term debt exposure to the hog industry has beentaken on by such entities as Farm Credit Canada,IIDI, and other government lending bodies. As anorm, these institutions have then taken hardasset mortgage security over land and buildings. Inaddition to mortgage debt, hog farmers also havea need for operating and machinery debt. The roleof banks traditionally has been to fund this workingcapital or machinery through operating lines andFarm Improvement Loans, respectively. Assecurity for these operating lines banks willnormally register a General Security Agreementunder the Personal Properties Security Act or anassignment of inventory under Section 427 of theBank Act. As such, the main source of security foroperating lines for banks has been inventory.Traditionally, these operating lines have beenmargined at between 50 per cent and 65 per centloan of value to inventory value. As hog inventoryvalues continue to decline and the balances ofoperating lines continue to increase, farms arecoming closer to or exceeding their margin limits,thereby putting a bank in an under-securedposition for the funds it has invested. Because ofthis lack of security, banks are unable to increaseloan limits on operating lines and as such farmersare not paying accounts payable as quickly to feedcompanies and other key input suppliers. This inturn puts pressure on these other suppliers anddecreases the quality of their accounts receivable.All told the banks see a great depletion in theworking capital position of hog farmers driving lowliquidity and the inability to service short-term cashneeds for operating and longer term needs toservice debt obligations.

One possible solution and by far not the onlysolution to this problem is to finance all or a portionof the operating debt with term debt either by wayof bridge financing or long-term debt eitherguaranteed by or provided by a government body,or mortgage lender. This would then strengthenthe balance sheets of hog farmers by movingcurrent liabilities to a long-term liability positionthereby improving working capital and liquidity tooffset low commodity prices. It must beacknowledged though that this is a short-termsolution only. As such in the long term in order forbanks to be comfortable lending to the hog sectorthey need to see pork producers along withgovernment revisit their long-term strategy in or tomaintain profitability and sustainability in theindustry.

Banks to this point have been very patient andhave for the most part taken a “wait and see”stance with regards to the hog industry. It hascome to the point however where chartered banksare becoming concerned with portfolio quality andpotential loan losses.

It should also be noted that the economic spin offof not only in this hog sector crisis but in theagriculture industry in general in PEI is going to bedetrimental to both banks and other industryplayers as well. Like any Canadian Province thebackbone of the PEI economy is agriculture and assuch it is important that the government participateactively to see that these industries thrive in thefuture.

Wilbur MacDonald(PC)Chair: Go ahead, sir.

John Hutchings: Thank you, Mr. Chairman. As arepresentative of Farm Credit Canada today, I’mhere today to show our support for the hog sectoron PEI.

We know that hog producers in PEI and acrossCanada are facing some very difficult conditions asa result of continuing low market prices, a highCanadian dollar and high input costs. Nationally,FCC has approximately 2,000 hog sectorcustomers in PEI and our loan portfolio is justunder a billion dollars. FCC has more than 50 hogsector customers in PEI, with again loans ofapproximately $20 million. We look at this as beingfive hog sector customers but also five farmfamilies. Sorry, 50 hog sector customers and welook at those as 50 farm families.

We have a substantial investment in the hogsector in this province and so we have beenwatching the situation very closely. FCC iscommitted to agriculture in Canada and PrinceEdward Island. We stand behind our customers ingood times and bad, though cyclical problemscaused by weather, market, diseases and otherchallenges. We know that our producers areresilient and dedicated, and they want to doeverything they can to continue to manage throughthese difficult times.

We encourage our customers to contact us beforetheir payments are due if they are anticipating anyproblems. Through our customer support strategy,our staff will work with producers one-on-one tolook at various options that may help them

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manage through this situation. Our loan productshave built-in flexibility that makes it easy for us tohelp customers face unforeseen difficulties. Weare keeping a close eye on the performance of ourportfolio as we work with our customers. Our hogportfolio is still generally healthy at FCC and ourcustomers are keeping their accounts up to date.I know that sounds a to be a bit of a contradictionto presentations made early but I will explain ourposition.

In looking at our arrears, they are a laggingindicator. We also monitor other lending indicatorssuch as accounts payable, operating loans as wellas the price so we have an early warning ofproblems developing in the portfolio. Our clientswill use up all their cash resources before arrearswill show up in our term payments. While we haveno arrears to speak of, less than 2 per cent of ourportfolio is in arrears. We know our customers arenervous with the present low prices and theconditions they facing and we know that theircapital improvements needed in the near future.

FCC has continued to approve new loans tooperators in the PEI hog sector. We are approvingthese loans on the basis of our customers’ abilityto repay them. This is a good indication of thestrength of our relationship with producers in thisprovince. As I mentioned our portfolio right now isvery strong. Flexible loan products help managesome of the cyclical nature of the business. Weare here today to offer our support to ourcustomers in the hog sector on PEI. Thank you.

Wilbur MacDonald(PC)Chair: Questions. Wehave Wayne and then followed by Andy and thenRon.

Wayne Collins (PC): I wonder if either of yougentlemen could answer this question for me.What do we know about the hog price forecast forthe next three, six or 12 months, in terms of price?

Paul Moffett : I wish I had an hourglass or acrystal ball.

Wayne Collins (PC): Well I mean you areobviously looking ahead right, you are looking atthe futures markets. There are certain indicatorsthat give us an idea of which way the price istrending, are we not?

Ron MacKinley (L): (Indistinct)

Wayne Collins (PC): I didn’t ask the honourablemember, I asked these two guests at the table.

Paul Moffett : Given the Canadian dollar(Indistinct) that obviously weakness it even further.Future prices, June is not looking too bad as it hasbeen in the past. It does not look rosy. But it isimproved. But it still doesn’t look all that great.

Wayne Collins (PC): It’s a slightly improvingpicture, would you conclude that?

John Hutchings: I would agree, slightlyimproving but I think the comment was made it’sstill not really promising with the short term futuresto maybe August.

Wayne Collins (PC): How big an impact is thehigher Canadian dollar having here? How much ofthe, you know, if we were back to a 62 cent dollartomorrow would the picture look much brighter?

John Hutchings: It would look somewhat brighter.In December we had looked at some of ourproducers information that indicated that there wasprobably 20 cents a kilogram missing off theircheque as a result of that squeeze or the increasein the Canadian dollar.

Wayne Collins (PC): Twenty cents a kilogram?

John Hutchings: Roughly, yes.

Wayne Collins (PC): Thank you.

Wilbur MacDonald(PC)Chair: Andy.

Andy Mooney(PC): Thank you for coming in. Itsgood to see the financial institutions taking aninitiative to come. I know John personally , we’vedealt with John in different capacities over theyears and it’s–what concerns me is a lot of thelarge chartered banks, have a board of directorsthey answer to and when they start getting antsyit’s not only some of the farms that are in toughfinancial straits that get caught in the vicious web,it’s some of the farms that are in good standingsthat if they’re, if the board of directors with afinancial institution take the notion that the farmingbusiness is not what they want to be in, then theystart pushing. And I know this personally, I meanour own farm we are in pretty good stead but wewere with one institution and we were told their

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board of directors really weren’t that keen onstaying in the farming business at one point andthey weren’t saying we want you to leave, but theydidn’t really want any farms. You know, it’s anawful frustration. Since that this same institutionhad come back and their board, this was year ortwo I don’t know where they are standing rightnow, but they had changed their line of thoughtand they thought the farming business wassomething that they wanted to hang on to and theywould do anything to gain the support and trust ofthese farms back.

But it just shows you how fickle they can be attimes which is a real concern. So it’s–there’s areso many washes out there it’s–and I for one, Ithink there’s something has to happen in the shortterm and the long term to get the farming industrystabilized. I mean it’s just, as a farmer myself it’s,especially on the hog side, I just don’t know howthese hog farmers are sleeping at nights becausethere is no light at the end of the tunnel right nowwith the dollar being a lot stronger. It’s having areal impact and from what I understand a lot of thefinancial people are saying the dollar should staystrong for the next four or five years and if that’sthe case. It’s going to be a long run for some ofthese folks.

So I don’t really don’t have any questions but I justwanted to thank you very much for coming in.

Wilbur MacDonald(PC)Chair: Ron, you . . .

Ron MacKinley (L): Question goes to FarmCredit. You were saying your accounts...you loanmoney out on land building, machinery I assumeand

John Hutchings: Term lenders.

Ron MacKinley (L): Yes. Do you put outoperating loans?

John Hutchings: No we don’t.

Ron MacKinley (L): You don’t?

John Hutchings: No.

Ron MacKinley (L): If you look at, I know myown situation like being a farmer, Farm Credit andI deal with you people, but the guy sitting besideme has the worries because he’s my banker too.

Two of them here..

Richard Brown(L): So you’re negotiating now areyou! (Laughter).

Ron MacKinley (L): No, I’m not. No, no I’m justsaying that basically what happens is Farm Credit,when people arrange their payments, Farm Creditmostly gets paid if they possibly can on theiroperating, on their loans. But it’s mostly taken fromyour operating through your bank loans or maybethat’s money that should of went to the feed mills.You know what I mean. That’s what I seem tofind. I know even in my own business, I don’t knowfor some reason Farm Credit, I mean you are agood company and everything else but it justseems that Farm Credit comes out and all of asudden the cheques gone out to Farm Credit if itwas any wheres there at all, to keep your paymentand then you try to hope that the price will improveand you’ll l get your bank or operating loan paiddown some. I think that’s some of the reasons whyyour arrears would be not as bad as you mightthink they would be, but you see some problems,is that correct?

John Hutchings: Your statement, I agree withyou. Our clients use all the resources they canbefore our payments go in arrears. If Farm Credithas a serious arrears problem you would knowthat there is a serious, serious problem. It’s–that’sa lagging indicator, it’s probably–you’re shuttingthe door after the horse is out.

Ron MacKinley (L): Now if I could go to the bankthat is representing the financial institutions. Howare the operating loans for, say the cowproducers, beef producers, and hog producers. Doyou find them high on . . .

Paul Moffett : Oh, yes. There’s no doubt aboutthat. From the operating lines that we see for bothhog and the beef industry. They are, either they’reat their limits or they are pretty close to the limits.A lot of them are out side of their margin in termsof value of inventory verses the value of theoperating, balance of the operating.

As you just kind of said, a lot of the times farmerswill, they’ll always pay their mortgage lenderbecause the mortgage lender’s got the ability tocome in and take their farm should they go intodefault. And so they will put off other people, liketheir feed company if they possible can or other

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suppliers if they possible can and so, as Johnsaid, it is a lagging indicator for him, but we see itas kind of, the first thing, that’s the first thing wesee is that the operatings do tend to increase.

Ron MacKinley (L): Tend to increase. Anotherthing with Farm Credit and probably, say forinstance if you had a mortgage with a lendinginstitution like, a lot of them are automatic checkoffs out of your operating account, is that correct?

Unidentified Member: Yes.

Ron MacKinley (L): So the money keeps comingout. And Farm Credit I think now uses that areawhere you leave a cheque , a canceled cheque orsomething and it automatically comes out of yourcheque. I know the old loans were you’d pay themtwo times a year or something like that. So that’san indicator there.

Another indicator was, getting back to Waynethere, he mentioned , he was asking you peoplebut Wayne if you had been listening when thechairman of the hog producers told you about thefuture and they didn’t look good other than maybeJune, July went up a little bit. Still not a break evenpoint and then they came back down. Like you doget transcript here from these meetings and youare supposed to listen.

Wayne Collins (PC): Sometimes maybe thingsrequire reiteration as you well know.(Laughter)

Ron MacKinley (L): I’m just saying like if youwere doing your job it might not end up on thedust shelf.

Wilbur MacDonald(PC)Chair: We’re not going tohassle here. We are going to get . . .

Ron MacKinley (L): I got a question here, Mr.Chairman, don’t be so touchy.

Wilbur MacDonald(PC)Chair: Okay, you ask thequestion and then I’m going to Richard.

Ron MacKinley (L): Just don’t, how come youare jumping so quick. We got all the time in theworld here. Now if you–futures who knows aboutfutures, selling on the futures? Can a farmer sellhogs now on the futures and use that money topay off his loans or what? How does that work, doyou know how that works? I don’t –say the futures

are there, so can farmers, I guess what do you do? Buy into the futures, is it?

Paul Moffett : You would sell your hogs inadvance either using Chicago or Maple Leaf as a,I don’t know if there’s a GPM representative herebut they do have a signature pork program whereyou can set a price early on.

Ron MacKinley (L): Yes, so that’s . . .

Unidentified Member: You don’t get that moneynow!

Ron MacKinley (L): No, but let’s say you soldyour hogs on the future price, and you people areboth involved in banks and you do look at thefuture price, do you? If a farmer sold his hogs inadvance say a couple of months ago for the nextsix month period, would he still be in a lossposition on that six month period, that’s thequestion? Or would he make a profit in the future.

Paul Moffett : If he had of done this a few monthsago the futures would of been still low enough thathe wouldn’t have been making money.

Ron MacKinley (L): No. That’s what I’m saying.There’s no out. It’s just, there’s no (indistinct) Nowhow soon do you think we as a governmentcommittee, Legislative Assembly Committee,should recommend–basically what the hog farmersare saying and the feed companies they needmoney, cash, cheques, the banks are up to theirlimits, most of them are up to their limits, some ofthem are over the limits–ho long do you think wecan wait before government acts with some cashto help out these hog producers? Can we go tonext August, can we go to next April. When do youthink would be the time?

Paul Moffett : I’d say as soon as possible.

Ron MacKinley (L): Alright. Thanks.

Wilbur MacDonald(PC)Chair: Thanks, Ron.Richard.

Richard Brown(L): Thank you, Mr. Chairman. I’llonly be brief. The bridge financing program that’sbeen established by the government and the PEILending Agency. Where do you rank that on,where do you rank that debt?

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Paul Moffett : Usually we do that as a currentliability, it’s no different then a ledger account oranything else. It is a good program because itdoes supply cash flow risk (Indistinct) .

Richard Brown(L): You take that off any loansthat you’re going to give.

Paul Moffett : That’s right. We still have to seethat as it is a current liability to the farmer. Sothat’s why I did kind of make the suggestion that if..whether the government loaned the farmermoney or mortgage lender loan the money and didon a long term bases. Then that debt would movefrom the balance sheet as a current liability downto a long term liability.

Richard Brown(L): So you are recommendingthat this committee recommend that the bridgefinancing loan be moved to long term debt or thatthe committee recommends that....

Paul Moffett : That would be great if it could beforgiven all together.

Richard Brown(L): Okay. Your banks... you knowyou guys in the banking industry you all haveeconomist on staff. Do you have any studies thathave been done in the farm industry and in the..from your economist point of view that you cangive us?

John Hutchings: Yes, we have information wecan provide.

Richard Brown(L): So you can table it, good.Farm Credit, has your bank or has your institutionstudied the US Farm Bill, and it’s effects on theCanadian markets?

John Hutchings: Yes, and it’s part of thatpresentation we will make.

Richard Brown(L): Okay because I just noticed,want to .. On the US Farm Bill it was so funnythere if you look up their information, Mr.Chairman, farmers can submit questions to theagricultural department in the US. One farmersubmitted, will I grow corn for corn crops so can Iget a subsidy? And sure enough the US guycomes right back, yeah your farm can be put righton the subsidy right away at any time you want. SoI think we should really take a look at that FarmBill.

You --the Farm Credit Corp. again you have all thefinancial statements I noticed for all the farmersthat have books with you and so you guys can addup like liabilities, equity and that across all thoseaccounts. So you have been seeing a decrease inequity accounts? Farmers are using their equitynow to finance because they don’t want you guysshowing up at their front door.

Okay, just one other note, Mr. Chairman, two othernotes, the Bank of Montreal has just issued its firstquarters earnings and I think it’s over $500 million.What’s CIBC’s?

John Hutchings: I don’t think we released ours .. .

Tape No. 4

Richard Brown(L): One final comment, I justasked you guys on behalf of the committee or onbehalf of myself, we’ve been meeting with thefarmers over the last few weeks and there is noquestion, there is a crisis. There is a problemgoing on. I, as a member of this committee, and Ithink everybody on Prince Edward Island wouldask you to hold off foreclosing any money. Take itas far as you can. These farmers are in crisis. Weknow they are in crisis. Hold off as long as you canbefore you run in and take farms away. I know itsounds motherhood but until this committee reportis done or something, we’re going to try to havesomething done by as soon as possible.

So if you could make that commitment and youknow go back to your masters and say look it, PEIis working on it. I think we should hold off for a littlewhile on foreclosures or pressuring these farmers.

Paul Moffett: What we also must recognize is thatif we put a pad lock on a barn door now, as I’vesaid before, farmers are out of margin as it is.We’d end up losing money as it were anyway.

Richard Brown(L): Okay, thank you.

Wilbur MacDonald(PC)(Chair): Good advice.That’s good advice Richard. We have Wilfred,Fred and then Ron has another question and thenwe’ll have to call it. Okay, Wilfred.

Wilfred Arsenault: I just want to maybe jump onRichard’s question here. Address this to the CIBCpresenter. The hog industry is in trouble, it’s no

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fault of their own. You’ve indicated that you’vebeen patient and the banks have done well by thehog industry but farmers are in it for the long haul.Now this is not personal, but is your bank willing tocommit itself to supporting the industry for 12months minimum?

Paul Moffett: Well yeah. We’ve been inagriculture....I don’t really want to speak. I didn’twant to get into CIBC as specific because I amrepresenting all banks today. But our agriculturalbook has grown significantly in Atlantic Canada inthe last few years, so we do have an investedinterest in continuing to support agriculture. Interms as I just said, we have to work with ourfarmers. If we put pad locks on doors, nobody winswhen you do that obviously. So we have to workwith our farmers on a continuing basis over thenext coming months, that is correct.

Wilfred Arsenault: Just a final closing comment,Mr. Chair. Banks are doing well financially andthat’s all to their credit of course. I think if thebanks are looking to improve their image inAtlantic Canada, I think this is certainly acommendable way to do it. If you’re there for thefarmers, the hog farmers in this case, I think youcertainly stand to gain at the other end as well. Soglad to have you on board.

Wilbur MacDonald(PC)(Chair): Fred and thenRon.

Fred McCardle(PC): Gentlemen. This is for ourbanking friend and Farm Credit as well. I had agreat long conversation yesterday with aconstituent of mine who is in a crisis situation inthe livestock business. He had an agreement withthe bank that they were going to postpone theinterest and the payments on the operating creditso he could deal with the suppliers that he had tocatch up with. So he sold the block of livestock,took the money, put it in the bank and then startedwriting cheques to his suppliers. Once thosesuppliers hit the bank the phone started ringing. Sohe called his banker who he made the deal withand low and behold she wasn’t in, so he had to goon to the branch manager who told the farmer thatthey’d overlooked the fact that the debt equity ratiohad a little out of balance and they needed to justcatch up those payments in the amount of thecheque he deposited. I know your banks wouldn’tdo that. But I mean you’re telling us, tell thefarmer, I just want you to go out to the country

roads and walk the same talk.

Paul Moffett: Well I can’t comment on thatbecause that as far as I know that wasn’t our bank.

Fred McCardle(PC): No, it wasn’t, but you’re heretelling us to help the farmers, we’re telling you thesame thing.

Paul Moffett: Yeah.

Wilbur MacDonald (PC) (Chair): Ron.

Ron MacKinley(L): Well I could take anotherangle on it. It’s our job to help the farmers herebecause we’re members of the LegislativeAssembly. You said the banks did awful well, theProvince of PEI has done well under hogs, cattleand potatoes here because it’s our lifeline alongwith the tourist industry and I hope you guys haveas much drive when we put this committee to tellcabinet to come out with a cheque and help thesehog farmers, as you are telling independentbusinesses. That’s what I want to bring out righthere.

We have a decision, it’s in our hands. If werecommend and the House recommends thesehog farmers get cash which most people aresaying including the banks, we don’t answerexcept to the people that voted us in. We’re in theProvince of PEI and agriculture is our number oneindustry. These banks, including Farm Credit,they’re all over Canada. So they got differentinterests all over Canada. I hope they do take youradvice what you said but also we got to show tothe banks that we have faith in these hog farmersand we got to produce some cash here. There’smore than just taking your reports like you didbefore and letting them sit on some sill and thencome back again and collect dust. Now you seemto. . .

Just one other quick question. You said that youdidn’t know if the government could afford to writeoff that fixed loan but if you put it into a long termdebt would mean quite a bit as a banker sittingdown looking at it, a financial thing. I notice thisgovernment here for some farmers, very few, butthey’ve been able to take preferred shares out withtheir company. Like one company, I think it’s$495,000 they invested in the hog outfit inpreferred shares. I think it was the LankIncorporated Farms who has immigrant invested

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money and then they had to refinance probablywhen that came through. So it looks like thegovernment took preferred shares. What wouldhappen if the government took preferred shares inthat 3 million? I mean they took 495,000 from onefarm outfit, might have been a former Torycandidate or whatever but they can look after theirown. What about, how would that work if they tookout preferred shares in this money? Would that beany difference then to send it to long term debt?

Paul Moffett: That would be even better.

Ron MacKinley(L): Not to the bankers. I’m talkingto the bankers.

Paul Moffett: Debt is eliminated and equity isadded so....

Ron MacKinley(L): Pardon?

Paul Moffett: Debt is eliminated and equity isadded so it’s just....

Ron MacKinley(L): So how is a preferred share? Like I’m not an accountant or anything. How doesa preferred share...I know they took out preferredshares in Polar and they wrote them down to a$1.00...7 million. I know they got 495,000 in theLank Farm. How does preferred shares workanyway in a business?

Paul Moffett: Well I want to direct that question toMr. Gerard Fitzpatrick. I think he’s. .

Ron MacKinley(L): All right, he’ll be here, I’ll askhim. Thank you very much.

Wilbur MacDonald(PC)(Chair): Okay, thank youvery much. I appreciate your coming and youcertainly have encouraging words for us. Thankyou very much

APPLAUSE

Part VI - Tourism Industry Association: DonCudmore

Wilbur MacDonald(PC)(Chair): Our nextrepresentatives are the representatives of thetourist industry. Okay, can we come to orderplease then? We have a representative from thetourist industry. Sir, would you introduce yourself

and yes, you have a statement, you can go aheadand read it.

Don Cudmore: Yes I sure do. My name is DonCudmore. I’m representing the Tourism IndustryAssociation of Prince Edward Island here today.If I had the opportunity to be here often I’dprobably have that door fixed because it reallydoes bother people at the back of the room whenthe door is opening and closing like that. You useit for 300 days a year so perhaps somebody couldfix it. That’s a bad start but that’s therecommendation we’re making is fix the door.

Mr. Chair, members, thank you very much for theopportunity to be here today.

Wilbur MacDonald(PC)(Chair): Maybe a goodoiling would help.

Don Cudmore: Squeaky wheel aye, that’s whywe’re here.

Wilbur MacDonald(PC)(Chair): Sometimeswhen the door is open, the noise comes from theother room.

Don Cudmore: Thank you and I understand that.My president Gordon MacInnis today is inNewfoundland on tourism association business sohe sent me along with the messages and thankyou very much for the opportunity to be here. Mypresentation is quite short today but I willacknowledge just to help put it in context to whywe’d be here today as the Tourism IndustryAssociation. Among the obvious reasons, thereare many other ones. The most important one asfar as we’re concerned is that the farmingcommunity on Prince Edward Island was, and is,core to the development of the tourism sectorhere. Many, many years ago, farming operationsopened their doors to visitors to Prince EdwardIsland which allowed us to create the atmospherethat we think that tourism on Prince Edward Islandshould be all about.

There are some farming families in this room todaythat are still in the tourism industry and there arealso some farming families, one which is anelected official in the opposition who has his homedoors open for many, many years to visitors. Iattribute his outgoing questioning personality to thetime that he’s had the opportunity to spend withvisitors to Prince Edward Island, and that’s Ronnie.

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They’ve always been in the business and there ismany, many farm operations that are also in thetourism business.

Just to kind of set the stage for it. The 2003 ExitSurvey which has been consistent with the pastfew years, Exit Survey, our Economic ImpactStudy, identified that only 41% of the peoplestaying in overnight accommodations here onPrince Edward Island, only 41% of them stayed inhotels and motels. The rest stayed in B&B’s,cottage operations, farm vacations andcampgrounds. That’s telling on itself. People don’tcome to Prince Edward Island to stay in the bighotels and visit the cities all of the time. It’s veryimportant that we recognize that as one of thereasons for people coming here. The mainovernight destinations, 35% were Charlottetown,something like 7% was Summerside. That’s ourtwo cities. The rest were spread all throughoutPrince Edward Island. So visitors didn’t come tostay in those large cities.

The other I think very important point to make is toidentify, no matter where they’re staying, and thisdoesn’t include the place where they spent theirovernight destination. But in the year 2003,426,000 visitors to Prince Edward Island visitedWest Prince and the Evangeline region; the NorthShore region about 379,000; the South Shoreregion was 331,000; Charlottetown was 450,000;Eastern Kings was 252,000 and Southern Kings426,000. Now that adds up to more than the 1.2visitors that we had but they visited more than onedestination in their day trips. There is a realmessage in that. People are using PEI as a placeto visit, they want to travel it. They have the luxuryof being able within a short period of time to travelit from tip to tip and to experience the PEI culturethat we have.

Now I’ll go into my sort of formal presentation nowthat I’ve set that up. It gives me great pleasure totake the opportunity to identify for you some of thevalue that the tourism industry on Prince EdwardIsland places on its other primary industries. Thetourism industry on Prince Edward Island is a largerevenue generator, generating 345.6 million in thesix month period in 2003. We employ 12 to 13,000people in our peak season and get up to 18 or20,000 people in the off season. We considerourselves, as an industry, to be good corporatecitizens as well as good neighbors. Goodneighbors on Prince Edward Island is probably one

of the more important things that we shouldconsider. A lot of our operations are placed smackdab in the middle of farming operations. As amatter of fact, they use to be parts of farmingoperations and some still are. So it’s really, reallyimportant that we understand that and rationalizethat in whatever we do.

We spend millions on Prince Edward Island ofdollars on marketing our product and product anddestination to invite potential visitors to come andspend time on our spectacular Island. Although weas a industry boast many world class destinationssuch as golf courses, sandy beaches, heritage, toname a few. In some cases our menu attractionsalso include resort hotels, B&B’s, et cetera. Havingsaid that though, the tourism sector recognizesthat our core product is our pastoral landscape,much talked about patchwork scenery, familyfarms, our ports and many fishing communities.Above all, it is the people who work in theseindustries day in and day out that contribute totourism success. While tourism operators may nothave a full understanding, and it’s very clear thatwe don’t have a full understanding of theagricultural community, of the agriculture sectorand its various sectors within, we do know thepractice of farming includes many importantprimary products, potatoes, livestock farming aswell as cereals, et cetera. The agriculture industryis very diverse, somewhat like tourism, made up ofmany pieces that make the whole. No individualpiece stands alone.

So today it’s very appropriate that we’re heretalking about the hog industry, but it’s even moreappropriate that it’s a full agriculture committeethat we’re talking to. It takes all pieces to create, inthis case, a thriving agricultural community, whichagain is the core of Prince Edward Island’s cultureand its people.

In 2003/2004, our Exit Survey identifies the topthree pleasure visitor activities. And they aresightseeing, that’s all about the land, that’s allabout the people; soft adventure including hiking,fishing, cycling, boating, birdwatching andConfederation Trail. It’s all about the landscape.It’s all about the people and beach business. All ofthese activities are enhanced by the many farmingand fishing operations throughout Prince EdwardIsland.

Another point I’d like to make is that we’ve all

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heard it, I grew up on Prince Edward Island andwe’ve all heard, if agriculture does well; if fisheriesdoes well; then so goes the Island economy; wedo well. So it is very important to us, especially asa tourism sector. Farming operations and fishers,they spend money on all of our operations andretail is the same thing. It is very important that thisimportant part of our society is supported to thebest of the ability.

So I guess in closing, on behalf of the tourismexecutive, TAIPEI Executive and the 34 sector andthe regional board members, we urge the Provinceof Prince Edward Island to do whatever isnecessary and feasible to help Islanders maintaintheir four industries and core values.

Thank you once again, ladies and gentlemen, forthe opportunity to present to you today on behalf ofthe tourism industry.

Wilbur MacDonald(PC)(Chair): Thank you verymuch, sir. Is there any questions from thecommittee? Andy and then Ron.

Andy Mooney(PC): I’d just like to thank you forcoming in. I guess being from a farm family andthe farming community, we always think we play atremendous role in tourism. Like a lot of peopledrop into the farmers to see how things are doneand things. It’s nice to see you come forward toacknowledge that on behalf of the industry. Thankyou.

Wilbur MacDonald(PC)(Chair): Ron.

Ron MacKinley(L): Yes. The tourismindustry...well PEI is built on farming, fishing andtourism we got to face it, the facts. As being afarmer myself and my wife is into the farm touristhome business. My mother was in it, still in it, foryears and years. I grew up down there and shewas in it. But also, there is a tremendous amountof jobs between both industries. Like our youngerpeople, when it’s not safe for them working atfarming, a younger age and go and work in thetourism establishment or vice versa. So it’s atremendous asset.

I’m pleased as a member of the LegislativeAssembly to see the tourist industry come forwardand tell it the way it is. I think it’s tremendous foryour department and your group of people to makea statement like this on behalf of the hog farmers.

Because we all know not everybody wants to go toa central place, they want to all be out in the ruralareas or out in the tourist’s–that’s how PEI is built.That’s why we have the friendliness andeverything else, this group of people.

So I want to thank you for coming forward.

Wilbur MacDonald(PC)(Chair): Thank you verymuch, Don. We appreciate your taking time tocome before us today..

Don Cudmore: Thank you very much.

Wilbur MacDonald(PC)(Chair): Status ofWomen next please. You have a presentation?

Part VII - Advisory Council on the Status ofWomen: Patricia MacAulay

Patricia MacAulay: Yes I do.

Wilbur MacDonald(PC)(Chair): Would youidentify yourself and fill in all the details.

Patricia MacAulay: Okay I will do that. ThanksMr. Chair and members of the committee. Myname is Patricia MacAulay and I work as aresearcher and a policy analyst with the PEIAdvisory Council on the Status of Women. This isan arms-length government agency and we workfor equality for women and we support women’sfull participation in all aspects of life. We have nineappointed council members from all around theIsland and we have a small staff. None of us knowanything about the hog industry, I’ll make that clearbefore I begin, but we do know about Islandwomen. When we were invited to be part of thisprocess, we really wanted to make sure thatwomen’s unique circumstances and contributionsare remembered in this discussion and as we workthrough this crisis.

We do know that all Island women are subsidizingthe economy here. We make up half of the paidlabor force but we’re still doing most of thehousehold work and most of the care giving work.At the same time, we make at least an equalcontribution to community work and there is notelling what women are contributing to the lives oftheir friends and their neighbors. In our paidworkplaces, we find that jobs that have beentraditionally been called women’s work, areassigned a lower market value then so called

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men’s work. And when government cuts servicesor the economy shrinks like it’s doing now, like it’sdoing now during this crisis time, women shouldermost of the responsibility for the tasks that getdownloaded to households and to the voluntarysector. We know that the Island’s economy isdriven by tourism, farming and fishing. As in thehousehold, women’s work in these sectors islargely unpaid and it’s often diminished as part oftheir husband’s occupation or their family’soccupation.

Although vital, women’s contribution to theseendeavors are often invisible and they’re usuallyprovided without any assurance of long termfinancial security. Rural women themselves maystruggle with recognizing their own contributions,often devaluing their work by calling it just helpingout or running errands, but that work has realvalue.

Statistics Canada reports that women do two-thirds of the 2.5 billion hours of unpaid workperformed in Canada each year. Depending onhow you measure it, that work can be workedbetween 235 and $374 billion annually. But thevalue of that work doesn’t get considered ineconomic and social policy. And as such, anybudgetary or policy processes that are in place areincomplete and women are left to absorb thedemands on their time, energy and skills as bestas they can.

Now given their considerable contributions andtheir unique position on the farm and in theircommunities, no examination of the agriculturecrisis will be complete without thinking about thepart that women have played to date, the particularimpact on women during this time of crisis and theneeds of women who may be facing displacementin an uncertain future.

To help us look at the issue from the women’sperspective, I’d like to tell you the story of onewoman farmer who in the midst of really tryingcircumstances on her family-owned hog farm tookthe time to tell me about her life as a woman livingand working on the farm. She also talked about thethings that concern her now and what she sees forher future. She took this difficult step of sharing herstory so that the voices of farm women could beheard during this discussion. I have the privilege oftelling you what I heard and I hope that farmwomen feel that I’m giving a clear representation

of their experience.

I traveled out to the farm on a lovely wintermorning last week. As I was driving down the lane,it struck me that it’s been an awfully long timesince I’d actually visited a working farm. For thefirst time in years, I felt the loss of the farms that I’dknown as a child here on the Island. As I pulledinto the yard I was reminded of them by some ofthe things that never change on farms. There isalways a whole lot less lawn than there is yard.You’ll always be greeted by one or two dogs whobark like this is the first visitor they’ve had in ages,and I found that the smell has pretty much stayedthe same over the years too.

But I had to move away from that nostalgic mood,that look back at the farm in the old days, when Igot past the dogs and into the kitchen and Irealized that this is a place that’s very muchcentered in the present. My hostess, and I’ll callher Janet, could spare a bit of time that daybecause she was volunteering the rest of the weekat Special Olympics and her schedule was prettyfull. While I was there she got a call from aneighbor who needed some help sorting out apersonal issue. Then she got a call from anotherneighbor and they talked about organizing theupcoming soccer season. It was clear to me thatthis kitchen was not only the centre of the farm butit was also a community centre as well.

Unfortunately, there was also another call and thisone was from the Farm Credit Corporation. Theywere just checking in to see if Janet was okaybecause after almost 20 years in operation, Janetand her husband have had to make this verydifficult decision to sell their farm and use theproceeds to manage their debt load. So here iswhat I heard from Janet and her situation andabout her role in it.

Her husband had always wanted to farm and shesupported him in that goal. When they bought thefarm it was not strictly a business decision. Yes,they wanted to earn a living but they also wanteda partnership for themselves; they wanted a stablehome for their family and they wanted a place inthe community. The decision required somesacrifice from Janet as she moved from her homeand family and she gave up a career for which shereceived specialized training.

She and her husband started from scratch. They

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worked together on the farm to manage andimprove the operation and to renovate the old farmhome where they were living. Both of them did thework and both of them took the risks. Some yearswere not so great financially, other years made upfor those losses. Janet knew the financial situationwell because she was the one who did thebookkeeping. They started a family and they hadtwo children. That meant that she spent more timein the house looking after the children while theywere young. But soon the kids are out in the barntoo, so she could contribute to farm work alongwith her household responsibilities and child care.In other words, she was putting in what amounts totriple duty, on the farm, home and with thechildren.

As the children entered school and hog pricesstarted to drop, she added another role and shere-entered the paid workforce, taking a job thatwas somewhat related to her original field, but notexactly what she had been trained to do. This wasseasonal work, which meant that during the busiersummer season, she was working full time andalso working on the farm and in the home. Andironically during the less active winter season, shecould no longer contribute to the farm operationbecause she was receiving employment insurancebenefits. But Janet’s income from her job and heroff-season EI benefits were absolutely necessaryto run the household and put food on the table.Essentially, her work was subsidizing the farmoperation.

The farm itself went deeper and deeper into debtbut they persisted in the hope of a better year thatwould turn things around. The stress on Janet, herhusband and their family was enormous. Janetworked to keep the children’s lives as normal aspossible. She says that their children certainly hadwork to do on the farm. In fact, she believes thatthe farm was an excellent place to raise children.Someone was always there to care for them; theyhad early and constant training in the valuesassociated in working together; developing onesskills and making contributions. But sherecognized that these were children and as suchthey did not need to be burdened with adultworries about financial survival, so Janet kept upa solid front for her children.

At the same time she was serving as what shecalls a ‘sounding board’ for her husband. The wayshe sees it, men who work in other professions

likely have colleagues with whom they can discusstheir work. On a farm there are no colleagues.Even in good times, there isn’t much socialcontact. The farmer’s partner becomes the onlyperson that he talks to about his frustrations andhis fears. While at the same time with his wife outat work and possibly no money for any paid help,he’s likely putting in longer and longer hours in thebarn and thus increasing his social isolation. SoJanet felt that she needed to be strong for him aswell. So where did that leave her? She was astrong, caring, intelligent, hard working womanwith a lot on her plate, and nobody to turn tobecause no other farm families were comingforward to say hey, we’re struggling too.

Last year was the breaking point. She and herhusband put their retirement savings into thebusiness and said, one more year. When nothingimproved, they made the decision this winter, bothof them at mid life, that this is the end of theirfarming dream. So now they’re parting with theirland, their buildings, their home, their community,their lifestyles, everything. They’ll leave with onlytheir personal belongings and heading into anuncertain future. In some ways, Janet says thatthis decision has been a relief. At least they knowthat the strain that they’ve been under for the lasteight years will be behind them. During that timethey worried constantly, not only aboutthemselves, but also about their livestock and thesuppliers who are depending on them to keep upwith their payments.

But as anybody would, now they worry about thefuture and they look to the past. They questiontheir initial decision to farm and all the decisionsthat followed. But this decision to sell has had onepositive outcome that Janet sees. It’s meant thatother farm families have felt comfortable comingforward and talking about their own difficultcircumstances. Janet knows now that they’re notalone in their situation and that many other womenhave experienced the things that have happenedto her. They too, have sacrificed their owncareers. They’ve invested heavily in the farm whilealso doing the bulk of the household and childrearing work. They’ve contributed greatly to theircommunities and they’ve seen little or no tangiblereward for all that effort. In fact, in a sense, they’vebeen punished for their decisions and theircontributions. Janet stresses that these weredecisions that she made willingly and gladly, butnone the less, the outcome has been disastrous.

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Janet says that she and her family needs supportin making this transition. For 20 years, they’vedone the work needed to supply others with a foodstaple and she wonders who will think of farmersand their families now, and do consumers evenknow where their food comes from. These areheart breaking questions and while we try tograpple with them, Janet has some things forIslanders to consider.

Tape No. 5 Patricia MacAulay (Cont’d): Janet has 20 yearsexperience in the hog industry and she speaksknowledgeably about the industry and about itssustainability within various trends that have beendiscussed today at this committee level. Shewants the issue of sustainability to be on the tableand she wants women included in that discussion.After all, it’s been women’s contributions that havehelped sustain the industry thus far. How will farmfamilies be supported in coping with the frustration,the uncertainty and the despair that they areexperiencing now in this time of crisis and in factthey’ve been experiencing for some time. Shesees a need for a crisis line especially for women,the sounding boards who now need their ownsounding boards. How will farm families besupported in the transition from farming to otherforms of employment if it, and when it comes tothat stage.

Women will need specific programs if they’veworked on the farm and at home for most of theirlives or if they’ve interrupted their own careers forfarm work and child rearing. Certainly womendevelop skills on farms but how will they transferthose skills to other work places. How will womenrecover their self esteem that gets lost along withtheir entire life’s work? What will it take to rebuilda strong woman who gave so much to otherpeople along the way? How will a couple developa new relationship that’s not based on a day to daysurvival. It’s possible that the loss of the farm couldbe even harder for women than men because ofthe value that they placed on the home and theiremotional investment in the family. Familycounseling, support programs that are specific towomen’s needs would certainly play a welcomepart in the recovery process.

During our morning conversation, Janet used onephrase that summed up her situation and I think itmay sum up the situation of many Island farm

women. She said that she felt caught in themiddle. And I thought, yes she is in so manyways. For years she’s been caught between theneeds of her family and the needs of the farm.She’s been caught between her husband’s needsand her children’s needs. She’s been caughtbetween her own wishes and the demands of herlife and now she’s caught between the past andthe future and she’s suspended there until sheknows what’s coming next for her and her family.

We know that most women face the dilemma oftrying to balance conflicting needs. But it’s clearthat farm women face extra demands. Perhapsthis time of crisis will help us pay attention to whatthey have already contributed and will force us tothink about how we can keep these women strongfor themselves, their families and theircommunities. When thinking through this crisis,please keep women in mind.

Wilbur MacDonald(PC)(Chair): Thank you verymuch. Do we have some questions? Richard.

Richard Brown(L): Thank you, Mr. Chairman. Inotice on the federal farm committee somequestions were asked about Saskatchewan andother provinces have help lines. Do we have ahelp line?

Patricia MacAulay: Not to my knowledge and notto this woman’s knowledge either. I have taken aquick look at some of the work that’s been done inthe Prairies around recognizing the fact that thereare serious or mental health issues that areassociated with the stress that families are livingthrough.

Richard Brown(L): Yeah, one of the comments atthe federal committee anyway, the Saskatchewanhelp line, they’re receiving quite a number of callsand they’re getting statistics together too. Somaybe Mr. Chairman, we will recommend as soonas possible, the province could set something upat least for the interim period, short term period.

Patricia MacAulay: And also too, I think that onething that came out of my conversation, Richard,with this woman was that, the need for face-to-facesupport and perhaps there could be some processin place where farm families get some help intrying to support each other.

Richard Brown(L): You also indicated earlier

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like the wife went out to work and she was on EIbenefits and she’s not allowed to work on the farmthen?

Paul Moffatt: No. Anybody who is an EI recipientis to be available for other work because it’s aninsurance program. So she was very conscientiousabout adhering to those guidelines and would giveup all you know, active participation in the farmitself.

Richard Brown(L): So really the farm has lost anemployee, an unpaid employee.

Patricia MacAulay: Exactly.

Richard Brown(L): So you can’t even go out tothe barn like you know, according to EI rules.

Patricia MacAulay: And she stopped taking careof the books for the farm as well. So there was areal loss to the farm operation. But they were insuch a crunch financially to meet their basic needsthat they needed the cash to keep the familyafloat.

Richard Brown(L): So you guys arerecommending a help line be set up.

Patricia MacAulay: A help line along with like anoverall support program because the crisis line hasa certain role to play in a situation like this. Butthere is also a need for maybe some in-depthcounseling specific to this situation and also theneed for I guess you’d call it, sort of peer supportamong farm families to recognize that there is areal emotional outcome of the stress that’s beenplayed out here and that women are the oneswho’ve been bearing, not to say that men haven’tbeen bearing the stress, but women have alwaystaken on that role of carrying other people’sburdens.

Richard Brown(L): Yeah, I guess we can’tunderstand or I’d have a hard time understandingit. Your life dream is going away and what stressthat would be. I know it was pretty stressful afterthe election I lost, but I don’t think it was as bad asthat.

Patricia MacAulay: You recovered.

Richard Brown (L): I recovered, yeah.

Wilbur MacDonald(PC)(Chair): Thank you verymuch. We appreciate your coming forward.Gordon Sobey next, Gordon. You have apresentation, Gordon?

Part VIII - Gordon Sobey and Susan Sobey

Gordon Sobey: Yeah. I could forward one alonghere. I just have the one extra copy for your Clerk.She can photocopy them at some point in time andpass around.

Wilbur MacDonald(PC)(Chair): Okay. And youhave somebody with you?

Gordon Sobey: I will do that introduction here. Asyou know my name is Gordon Sobey and I thankyou for the opportunity to appear before you today.I brought along my daughter Susan with mebecause I appeared before here once before andrecognized my throat gets a little hoarse andscratchy after awhile, so I asked her to participatewith me to read some of my presentation.

Today I hope to offer some suggestions and foodfor thought on the very real plight of financial andemotional hardship facing Island farmers this year.But first I would like to talk a little about myself forI believe it is the opportunity to learn from pastexperiences in over 30 years as an owner of hogsin the Island industry that has led me to believe inmy thoughts today.

Susan Sobey: As many of you probably know, I’mthe former president of the PEI Federation ofAgriculture. Time certainly does fly for it is over tenyears since I’ve served in that position. What manyof you don’t know about me is that I also served aterm on the PEI Hog Board, I was Chairman andacting secretary manager of the Atlantic FarmersCouncil in 1995 when the Atlantic Provinces losttheir freight subsidies. At that time, I also servedas the lone Atlantic representative on the NationalFarm Safety Net Consultative Committee. I servedas vice-chair of Atlantic Agri-ProductsCompetitiveness Council and was the driving forcebehind a $65,000 study by the Atlantic ProvincesEconomic Council into the competitiveness of theAtlantic Agriculture Industry as well as theinaugural chair of the PEI ADAPT Council.

Although I have not traveled the world extensively,I have traveled on industry tours to Europe, NorthCarolina, Iowa, including a stop at the Chicago

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Mercantile Exchange and also every province inCanada. I feel I have a well rounded and informedview of the Canadian agriculture industry.

If I might take a minute I would like to tell you alittle story that could lighten the mood but alsoprovide some insight. Shortly after the KingsclearResort was opened just north of Fredericton, NewBrunswick, Agriculture and Agri-Food Canada tookit upon themselves to host a conference andpartnerships between the various links in the foodchain. You’re right in guessing that it was theinaugural meeting of what became the AtlanticAgri-Products Competitiveness Council. Afterregistering and slipping on my name badge, Iproceeded to mingle with others. After engaging inconversation with one gentleman, in noticed theline up behind him. People were waiting patientlyto introduce themselves to me. After saying helloto a couple of others, I was introduced to this freshfaced, youthful, exuberant rookie employee atAgriculture and Agri-Food Canada and heexpressed to me what a pleasure it was to havesomeone of my stature at the conference. It waswonderful that the Sobeys were taking such aninterest in working with other sectors. Alas, I hadto be honest. I burst his bubble and explained thatI was but a lowly pig farmer from PEI. The lineupquickly disappeared.

Ladies and gentlemen, because I share a not toocommon name with a family with a hugeinvestment in food retailing in the region, I, like anygood Islander would, make it my business to knowas much about their business as I possibly can.

Gordon Sobey: It is because of this knowledgethat I have long recognized the uphill battle that weface as primary producers. All sectors of the foodchain are profit orientated. In order to improveprofits and therefore improve shareholder value,which is the ultimate goal of any for-profitbusiness, it is often necessary to get a better dealfrom someone you do business with to improveyour bottom line, whether it’s a customer or avendor. It is also important to note that in today’sworld market, the value of any good is a sale pricewhere there is an over supply plus transportationinto another market place. If it is an internationalmarket place then you can plus or minus theexchange rate differentials. It has been many,many years since the market place hasconsistently returned decent earnings to theprimary hog producer on PEI. There are many

reasons for this.

The Cheap Food Policy of our southern neighborsis one reason. The US has consistently enteredinternational treaties indicating one intention to theworld while revamping their domestic supportprograms to ensure an over abundance of, inparticular, grains and oilseeds. I would like tomake this clear. It is my understanding that untilthe 2002 US Farm Bill, the US did not over-subsidize their livestock sectors with federalsupport programs. They subsidized the majorinputs into that industry, corn, soybeans, grass,anything to do with cropping. Past US Farm Billsensured low feed cost for their nation’s hogproducers. The 2002 US Farm Bill added a MarginInsurance Program to support their livestockindustry.

Susan Sobey: The Canadian government hasalways claimed that we could not afford to matchthe United States Support Programs. Provincialgovernments, with the exception of Quebec, havebeen all to eager to agree. I believe we can nolonger afford not to match support programs, aswe can readily see that the WTO can not reachagreement on eliminating trade distortingsubsidies. If Canadian farmers are not given equalopportunity as our competitors we will not be inbusiness when the major trading nations finallyagree that trade distorting subsidies should nothave a role to play in world commerce.

To give you a clue as to the discrepanciesbetween the supports between the two countries,I recently read an article that indicated that the UShad not changed their overall support level fromthe reference period of 1986 to 1988. However,Canada has abided with our trade treatyobligations and are currently at 16 per cent supportof the same period. I believe the federal andprovincial safety net budgets must be increasedbetween 100 and 300 per cent immediately. If youthink you heard me wrong or if I’ve written it wrongin my brief that I do mean between double andtriple what is currently being proposed under theAgriculture Policy Framework. If there is a backlash from Treasury officials in Ottawa then I wouldgo a step further and suggest a tax on food at theretail level to garner the necessary revenue tosupport this country’s farmers. However, therewould have to be some caveats on mysuggestions of a food tax.

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The revenue derived from this tax would not bepermitted to be added to the federal treasury anddispersed in the current manner, a manner inwhich a few bureaucrats who know little aboutagriculture determine what support agricultureshould get. These dollars would go into a fund ofits own and would be controlled by a three partycommittee of federal/provincial and farmrepresentatives who would set the agenda for theAgriculture and Agri-Food Industry in Canada fromresearch, food safety, safety nets, environmentand finance and trade. The advantage of this fund,similar to the EI fund, is that if the dollars were notspent or nor needed in a particular fiscal year, thena carry over could occur and the dollars would notbe lost to agriculture and would accumulate inyears of decent returns.

Gordon Sobey: I no longer trust top levelbureaucrats to do what is right for agriculture.Farm Aid Programs, designed to minimizegovernment financial exposure but allow premiers,prime minister and agriculture ministers to standon a soap box and praise their governments insupport of agriculture while primary producers aregoing out of business need to be fixed.

Another essential caveat in a food tax would bethe need to increase the GST credit for low incomeand poverty stricken Canadians. The reason I amsuggesting these measures as a long term solutionis the failure of current programs and governmentsin stopping the destruction of rural Canadaincluding rural PEI.

I do not advocate a return to income supportprograms of the past but more decoupled supportthat is more common in the European union. Iagree with Minister MacAdam on his assessmentof the processing industry in that whenevertaxpayers’ dollars are given to support farmers, thefarm gate price seems to dip to the point wherethose support dollars seem to end up on thebottom line of the processor. Our elected officialsmay have to take a look at legislating a fixedpercentage of the retail cutout value of a pig be aguaranteed return to the producer.

In case some committee members do notunderstand what is meant by decoupled support,an example would be a per farm payment forparticipating in a Quality Assurance Program or aprogram designed to improve environmentalsustainability. These dollars have no bearing on

the price of the commodity or income of a farm andare considered green under WTO rules.

Susan Sobey: The second long term solution forPEI farmers is the establishment of a method tonarrow the transportation expense of marketingour products or pricing our inputs. Since our regionlost FFA and MFRA/ARFA, I believe farm netincomes have been in decline relative to otherregions of Canada. We cannot continue adding thecost of freight to raw input products such asfertilizer and subtract the price of freight from ourfinished product and still remain competitive inmany markets. Every time transportation costs goup, net farm income margins go down. Onesolution would be to twin the rail line from Halifax,Nova Scotia to Windsor, Ontario so the productcan move in a never ending fashion and not sit ona siding for another train to pass. I believe it isessential that we look seriously at this proposal. Itmakes sense in terms of Kyoto, improved safetyon our road system and did I mention federalsupport in terms of construction, maintenance andongoing freight movement.

Sir John A. MacDonald had a dream. Terry Foxhad a dream, I, too, have a dream. My dream is formy children to live and enjoy life in an AtlanticCanada that is a have region within a prosperousCanada. I sincerely believe that true prosperity inany region only happens when the rewards of apeople’s labors is reinvested in our community. Ibelieve the current economic system under whichwe live returns too much of the fruits of our labor toUpper Canada.

I thank you for listening to me ramble aboutpossible long terms solutions when there is littleyou can do immediately on them other thansupport these concepts and help lobby our sisterprovinces and federal government for realmeaningful change.

Gordon Sobey: Be afraid not, but I have somesuggestions about short term solutions to ourindustry woes where you can have an immediateimpact. In my travels, I have learned much. In theUS, individuals states look after supports to thelivestock sectors in areas such as environment,taxation, labor, finance and regulatory issues. Ibelieve the Island government can and should helpthis industry in similar fashion.

In the area of environment, immediate help could

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be given by announcing a refund of all provincialtax collected from the Sustainable ResourceConservation Program since its inception, not justfrom August 14, 2003. The paperwork couldreadily be in place to determine the financialexposure to the province. I would also suggest tocontinue working with our federal partners to lookat ways we can improve our environmentalsustainability with a decoupled support payment tohelp achieve success. It is my contention that wemust continue to achieve higher standards interms of environment and food safety in order togarner more market share. I feel we can not waituntil a return to profitability for this to happen. Theconsumer and taxpayer is demanding this be doneand I feel they should share greatly in thatresponsibility.

This government could also take a look at propertytax rebate or credit allowing farmers who providethat charm in our rural landscape encouraging thatpastoral and scenic beauty enjoyed by tourists andIslanders alike.

Susan Sobey: Another area of concern for ourindustry stems from the recent rate increase byMaritime Electric. This government should look ata power rate rebate sufficient enough to put ourindustry on a competitive position with ourneighboring provinces. In order for our farms tostay competitive, many of our operations haveexpanded to the extent family labor can no longerbe expected to do all the work necessary to run anefficient hog operation. I feel governments mustcommit more dollars to training and furthermoredesign the programs so they are farmer friendlywhich, if achieved, should result in higher on-farmproductivity, another part to the equation for longterm sustainability.

Finance is such an interesting area when dealingwith public money. Our industry is reeling fromsuccessive years of poor returns and low margins.I believe we need to put policies and programs inplace to significantly improve the operatingmargins on our farms. We need a combination ofcash now and lower interest rates on allgovernment backed loans to our industry toweather this crisis. The CAIS Program as is, isonly a one time payment for most producers. Isupport the concept of an artificial payment triggerrecognizing it too is a one time only supportmechanism. We will need to continue to work onincome support programs that actually work for our

industry.

I have always felt that successive Islandgovernments have missed the boat on theutilization of the PEI Lending Agency. It is currentlybeing managed as a bank and I feel it should beused to help Island businesses secure financing atthe cost of government borrowing. Currently, 60-day money is around 2.8 per cent with no upwardtrend in sight. I think it would help our industrysignificantly if the province were to rewrite ourGPM loans, hog bridge loan and any and allmortgage and operating loans held by individualproducers at the PEI Lending Agency at this lowerrate rater than attempt to make a healthy profit offthe backs of nearly bankrupt farmers. I suggest thefederal government could do the same throughFCC.

Gordon Sobey: There is also the need to developa pool of money, venture capital in scope are usinga preferred share structure with long term lowinterest rates to encourage profitability in the hogindustry to attract new farmers and maintain farmvalues in current operations. Another mechanismwe could explore is the development of an interestfree operating loan in conjunction with the FederalCash Advance Program as many Island livestockfarmers grow and store feedstock for manymonths.

I also think we need to develop a strategy to dealwith the issues of basis. That being the localfactors which help drive the price of our inputs andthat of our outputs. It is interesting to note that inmost other hog producing areas pig feed issupplied by feed companies whereas on PEI mostfarmers have their own mills. This requires moreinitial investment on behalf of the farm operatorand higher debt obligations that sometimes drivesones financial ratios out of sync with acceptablebank practices making it harder to get affordablecredit. I think we need to implement programs thatwill help producers lower the cost of preparing atonne of feed. New regulations soon to beimplemented by Agriculture and Agri-Food Canadawill raise the cost of milling to Island farmers. Ithink it is fair to say this industry cannot absorbmore expenses passed on from regulatory bodieswithout compensation.

In many of these program initiatives, I believe bothlevels of government have a role to play. Federalguidelines have virtually shut most of agriculture

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out of funding from ACOA and I think that waswrong. If ACOA is going to be the deliverymechanism of choice then I feel it should be opento every business in Atlantic Canada and not ruledby a few bureaucrats who think they know what isbest for Atlantic Canada.

In summary, ladies and gentlemen, I feel the PEIhog industry needs a better deal from all itspartners if we are going to continue to beproductive contributors to our communities, ourprovince and our country. I thank you for your timeand look forward to comments or questions.

Wilbur MacDonald(PC)(Chair): Thank you. Ron,a question?

Ron MacKinley(L): Good brief. I think a lot ofwork went into it. But some of the points youbrought out here, there seems to be two tier. Thereis a tier for downtown Ontario or Toronto, Ontario,Quebec. And if you look at, I believe, I picked it upin one of the CBC reports on the National Newsthat the Government of Canada pays $300 millionmore to buy roughly 80 military vehicles in Canadathan they could have bought them in the US. USapparently were buying 200 military vehicles andthey were offered the same deal, the piggyback, ofa saving of 300 million. So what took place herewas, in order to protect the jobs in Ontario or inQuebec, wherever they’re being made, theGovernment of Canada paid $300 million forroughly 80 vehicles more. But yet in agriculturethey tell us we can’t compete with the Americans.There is something wrong. You brought up goodpoints here.

Electrical rates. I know we pay 27 per cent nowmore than New Brunswick. What would 27 percent saving be if we were in par with NewBrunswick to your operation? Do you know that?

Gordon Sobey: Yeah, about $2500 a year.

Ron MacKinley (L): $2500 a year right there. Andhow many pigs do you raise?

Gordon Sobey: I’m in the process of expanding.I’m one of the few on the Island that’s doing it.That maybe cancelled really quickly. We hope tostart finishing 4,000 a year.

Ron MacKinley(L): What are you doing nowthough?

Gordon Sobey: Probably two.

Ron MacKinley(L): Two thousand. So you’redoing 2000 pigs. So it’s $2500 electrical bill. Nowif the hog barns in New Brunswick, would theypay--like here we get a tax break on our land, weknow that. It’s been there for years. But on ourbuildings we’re taxed at the retail value. Do youknow if New Brunswick and Nova Scotia get a taxrebate on their land? I know they get the GST andthe PST all back on the input cost, but we only getthe GST from the federal government. Theprovince keeps the 10.7 per cent and put it in yourback pockets. But what about the tax rebate? Doyou know Nova Scotia and New Brunswick getsthat?

Gordon Sobey: Yeah actually they’re bothdifferent. In my days with the Atlantic FarmersCouncil, we continued to have round tablediscussions on that. In Nova Scotia ,you find themunicipalities do the taxing and they’re veryunforgiving as far as wanting to give dollars back.We’re provincially jurisdiction over (Indistinct).

Ron MacKinley(L): (Indistinct) on taxes. Now youtalked about advance payment. Are you trying toadvance payments for pigs that are in the barnbecause right now you can get up to $50,000, Ibelieve advance payment for grain for your ownfarm storage.

Gordon Sobey: What I would like to see that, isexpanded to include that operating capital for thelivestock farmers, both hogs and beef. I think it’s adoable situation if we can negotiate with thefederal government as part of companionprograms or...

Ron MacKinley(L): So what you’re saying for oursilage, say if some farmers use 500 bags of silagethat doesn’t qualify. All that qualifies on the farmright now is advance payment for grain.

Gordon Sobey: That’s all you’re saving now, yes.I’m saying yes, $50,000 interest free cash advancefor all livestock farmers on PEI.

Ron MacKinley(L): For feeders, straw orwhatever, all right.

Wilbur MacDonald(PC)(Chair): Anybody else?Wayne.

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Wayne Collins(PC): Just one short question. Itkind of surprised me, after all we heard about thestate of the hog industry today, you say you areexpanding.

Gordon Sobey: I’m one of the last ones to expandunder the GPM Program. Because I looked at thenumbers and for years I did not expand. Look, itjust does not make sense. I’ve exited the potatoindustry about three years ago and looked at a 100sow farrow to finish operation and it just was notfeasible to be in it. So I had decided either toexpand or get out of agriculture. And the childrenlike living where they are, so we expanded.

Wayne Collins(PC): I just want to say I reallyenjoyed your presentation here today. I’ve learneda great deal. You’ve come up with a tremendousnumber of ideas here. They’re worth exploring,both in the short and the long term as well. I thinkCanadians, we all know we’re getting a break eventhough we wonder about what happens to all thatmoney for that pork roast along the line. In thebottom line, when we get to the checkout, we allknow we’re getting a bargain on our food here inCanada. The specter of the tax on food that wouldto go to a separate account being dealt with byresponsible parties for the sustainability of ourCanadian agriculture. Maybe something worthlooking at and certainly it is in the long termcategory there. But the ideas and the other ideasyou have expressed here today I find quiteinteresting. Thank you very much.

Tape No. 6

Wilbur MacDonald(PC)Chair: Ron, first and thenRichard, okay Richard.

Richard Brown(L): (Indistinct) comments abouttransportation system. I did do some work on thetransportation sector, and in the US they have aninterstate network of roads fully funded by thefederal government. But the federal governmentpays the states to maintain interstate road systemsso--and they get away with that under WTO and allthat stuff. They say well we need this interstatenetwork for our military. They call that a militaryasset more then an interstate road so you areright, there’s ways to get around it. They arefinding every way to get around, I can’t understandwhy we can’t find a way to get around it. Thankyou, it was an excellent presentation, by the way.

Wilbur MacDonald(PC)Chair: Ron.

Ron MacKinley(L): You’re the last one to expandunder the GP program, the Garden ProvinceMeats Program. Are you expanding--like finishingend sows or you just expanding and finishing?

Gordon Sobey: I hope to be a 200 sow farrow tofinish operation when I finish.

Ron MacKinley(L): When you are done? Twohundred sows. How’s that program work, like theGP Program?

Gordon Sobey: There’s various programs. Theychanged it here a couple of years ago and they nolonger have the interest free portion for the firstyear. So it’s prime plus one at the Bank ofMontreal that I will be anticipate to pay that. Like Isaid in my brief I would like to see that loan be atthe cost of government borrowing at the short termrate. I think it’s more feasible, I think it’s doable.Where the will is there, I think it is really doable forall of, for each and everyone of the hog producersand it would result in significant savings.

Ron MacKinley(L): So you’re talking--your barnyou are looking at it’s going for farrow to finish,right.

Gordon Sobey: Yes.

Ron MacKinley(L): Alright, so this is a farrowingbarn, correct?

Gordon Sobey: Finishing barn is the one I’m(Indistinct) .

Ron MacKinley(L): Alright, now I’ll differ a little bitthen Wayne there. Well I think the consumers arepaying too much at the stores. If you look at beefat 15.50, 10.25 a kg. If you look at pork, 7.89 a kg,where the farmers--the problem is the packers andit’s been proven in the United States, the packersand the stores are taking too much of a mark upon the product. How we get more to the farmersI’m not sure. But if you go into a grocery store andyou walk out with a little piece of meat and it’s $20some. It’s not cheap, but compared to what thefarmer gets, compared to what the chairman gotthat letter for that steer or...

Wilbur MacDonald(PC)Chair: It was pork.

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Ron MacKinley(L): What!

Wilbur MacDonald(PC)Chair: It was pork.

Ron MacKinley(L): One guy sent you a letterselling steers. Anyway, and then the pork I believeit was..what was the pork price?

Wilbur MacDonald(PC)Chair: I believe it was$98.

Ron MacKinley(L): For the farmer got.

Wilbur MacDonald(PC)Chair: And 616..

Ron MacKinley(L): When it went through thestore. So .. I think the consumers are going buying,they are paying plenty, myself. I think the problemis we got to get more of the packers’ share and thestores’ share into the farmers pockets and we didbring up. We talked about beef legislation onshelf space. Our government official advises ushere that could be hard to do. Legislation shelfspace because of the trade rule. But there seemsto be--I did like the NFU’s presentation. Imentioned before regulating the prices that thefarmer would get and what the grocery store cansell. Maybe that’s the way to go. But the farmersdefinitely are not getting the share of the market. ..

Gordon Sobey: If you might want to go back tothe early 80's when I think when Eugene Whelanwas he Minister of Agriculture for Canada. And Ithink he indicated that the consumers were eithergoing to pay at the grocery store or through thetaxation. But I think successive people in theGovernment of Canada since then have forgottenabout the farmers. You can go a whole generationwithout investing in your farming enterprise. Andyou can farm right along but at the end of thatgeneration you don’t have a farm left.

And I think that’s where many Island farms are at.We just have not had the money to reinvest andput new technology into it and the Government ofCanada has been responsible and have looked atthe WPO agreements and stuff like and say wecan’t do this. We have to cut back. Health carecomes first, education, military what have you andwe have allowed ourselves to be duped intothinking that and the reason I present a tax on foodas the alternative, we have to get money into thesystem somehow and I do not think--if you take the

pie, we have 12 per cent of the GDP goingtowards food. You are not going to increase that to18 to 24 per cent like it is in the Europeans causeyou are going to take away a piece of that pie fromanother part of your economy and no governmentwill allow that. They want to--what we want to do isincrease the farmer’s share of that pie. Nogovernment is going to counteract the investmentsinvolved with the public and companies such asMaple Leaf, Sobeys, Weston’s, what have you, inorder to make sure their profits are decreased inand it be returned to the farmer.

Consecutive studies have shown the consumerand the tax payer is willing to give more money forfood as long as it is going to the farmer and theonly way, proper way to do that rather goingthrough each chain cause everybody is going totake a little piece out, is the most economical waywas to take it directly from the top, from theconsumer at the retail level and plug it back intothe farmer. And I’m proposing to do that in adecoupled form of manner so that the processingsector again doesn’t just add that to the bottomline and we are back here in three, five years timelooking for more support.

Wilbur MacDonald(PC)Chair: Robert, do youwant to end up?

Hon. Robert Ghiz(L): Couple of questions. I foundit interesting that your Bank of Montreal loan isprime plus one when that’s in fact cheaper thenthe lending agency when the lending agency’ssupposed to be part of government andgovernment shouldn’t really be in the business ofmaking money. But that’s only a comment.

With regards to your–you said the agriculturalpolicy framework, we need an increase of basically100 to 300 per cent, what type of dollars is that?

Gordon Sobey: Well right now agriculture towardsthat is 1.1 billion in the federal treasury and ...

Hon. Robert Ghiz(L): So we are looking at two tothree.

Gordon Sobey: That doesn’t even cover negativemargins. We are looking at 2.2 ..I’d say 3.3, to getus more in line of what the US is putting out interms of their agricultural output. We need to goover $3 billion from the federal level and that’susually matched 40 per cent by the provincial end

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of it.

Hon. Robert Ghiz(L): One question for yourdaughter. Do you want to go into business withyour father some day?

Susan Sobey: No.

Hon. Robert Ghiz(L): What happens if the hogmarket improves, would you not want to go intobusiness?

Susan Sobey: I don’t think so.

Wilbur MacDonald(PC)Chair: Ron has a finalquestion.

Ron MacKinley(L): You mentioned EugeneWhalen. I knew Mr. Whalen quite well. And he toldme one of the biggest problems he had when hewas Minister of Agriculture, this was after heretired from agriculture and he was down hereopening up the vet college or something, he was atour place for dinner, he told me the biggestproblem he had was the plight of the federalbureaucrats to make sure that we had a system forfarmers to produce food in Canada. Because atthat time it was cheaper to come in from outsidefrom the third world countries. Like you know lookat Brazil today. What looks like what happens nowis these bureaucrats are starting to win. And theyare just saying well we’ll keep the farmers going aslong as we can and just let them disappear.

But what people don’t remember that World War II,there was 27,000 people in Holland died, notbecause of the German bullets but because ofstarvation. And that’s where some of the Dutchpeople come in here and they have that bred inthem and why they probably make better then wecan cause we’ve always had lots of food, but whenyou go through something like that and that’s ahard message to get across to our federal MP’sand also to our local people like because there’sless farms now, more generations are away fromfarms. If you went back into the history of theprovince there was a lot of people had someconnection to farming. Now there is less and less.And it gets less of a political issue out therebecause people have food that they can afford tobuy when they go to the stores. We have a bigproblem.

Wilbur MacDonald(PC)Chair: Final comment.

Gordon Sobey: Final comment, yes. The reasonthat cheap food policy exist in the US. It’s primarilybecause they don’t want the apple cart to be upsetand you keep your people fed and they don’t upsetthe apple cart and the powers that be, theVanderbilt’s, the big money people, they stay inpower, they make the regulations, rules in order toincrease their profits. And it’s no different inCanada really. So that’s all I have, thank you verymuch for the opportunity.

Wilbur MacDonald(PC)Chair: Thank you verymuch, Gordon and thank you dear for coming too.Appreciate it very much. Applause.

Perhaps we will hear from the Atlantic VeterinaryCollege and then we will take a little five minutebreak after that. Is there anyone here from theAtlantic Veterinary College, yes we have.

Part IX- Atlantic Veterinary College: Dr. DanHurnick

Dr. Hurnick: Thank you, committee members, myname is Dan Hurnick. I’m a professor at theAtlantic Veterinary College. I’m a veterinarian andI’ve been asked to speak here on the impact ofwhat’s happening on the farms on the veterinarianprofession in Atlantic Veterinary College.

The veterinarian profession is a service professionto agriculture. There is also other sides to theprofession, companion animals, horses and so onbut I’m here to speak as a food animal veterinarianand we do play a role in agriculture. If agriculturestruggles, if livestock struggles, the food animalveterinarian struggles, there’s no questions. Andthere are veterinarians throughout the Island in allparts of the Island and a vital part of the ruraleconomy and if there’s no dollars in raising pigs,all the service professionals hurt and we’ve heardfrom some of them and we will hear from others.

So there is no question about that. The AtlanticVeterinary College is a teaching institution. Itattracts students from all around the world. It’s akey piece of the knowledge economy for PEI thatthe industry and government has been buildingand both dollars and prestige comes to PEIbecause of the University of Prince Edward Islandand the Atlantic Veterinary College.

One of the reason that the Atlantic VeterinaryCollege was placed on PEI was the presence of a

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vigorous and strong farming community. Itbecomes more difficult and it will be more difficultto continue the present level of service in teachingwithout a strong farming community and I think thisneeds to be understood.

We are training veterinarians for a career inagriculture and I’m part of the group that teachesfuture veterinarians. One of the things thatconcerns me without a strong farm sector wherewill the clients come for our students. Where willthe next generation of farmer come from to raiseour food and that we have an immediate crisis butthat is something that for me concerns me in thelong term because we are producing students andwe are looking at the next generation.

In agriculture, all the service professions, we are inthe same boat. What can we do? What has beenhappening to deal with some of the issues thatwe’ve been discussing? The Atlantic VeterinaryCollege will continue and has continued to workwith PEI farmers to help them become as efficientas possible and this work needs to continue but it’snot a long term solution.

It’s just a part of staying afloat. One thing I’d likefor this committee to be absolutely clear on, in myexperience, PEI farmers are very good and veryskilled farmers. Today’s immediate income crisis isa market failure due to border restrictions for meatand an adverse US exchange rate.

The longer term problem is that we havethousands of farmers across North America thatare pushing a product into a hand full of processorwho in Canada supply only two major retail chains.The pricing control and thus profit control isoutside of farmers’ hands. And that is theunderlying problem associated with as well as theimmediate one that we talked about earlier.

What else, the Atlantic Veterinary College togetherwith the hog producers of PEI and Nova Scotiaand New Brunswick together and the Departmentof Agriculture here on PEI have joined togetherand are engaged in long term strategic R&Dactivities for the industry and this is based on astrategic plan that was put together and continuesto be guided by producers and it includes a longterm plan for environmental sustainability lookingat greenhouse gas and optimal manuremanagement. Those are all things that PEIfarmers are looking at doing. The bottom line is

that PEI farmers are conscientious, responsiblepeople who are doing the right thing.

R&D takes time as in dollars and it is not an easything to do, but it is a path that farmers havechosen and they are going down that path. In theshort term ,the Atlantic Veterinary College and theveterinary professionals, there’s nothing we can doright now with the cash prices other then to sharethe hurt and to come to meetings like this wherewe can stand with the producers, in front of you asthey asked for help because like I said, we are allin the same boat, and we are working towards along term solution. Thank you.

Wilbur MacDonald(PC)Chair: Thank you. Wayne.

Wayne Collins (PC): Just one question, DanHurnick is it.

Dr. Hurnick: Dan, yes.

Wayne Collins (PC): I remember 20 years agovisiting the elite hog farm down in Uigg and Iremember there was an attempt at the time toreally try to come up with I guess, quality,improvement quality of the hogs on Prince EdwardIsland and it was such that even to go inside, youhad to get a shower and dress in their clothes justto go on and visit the hogs and I can recall evenattending a caesarean section in a Montague clinicas part of making sure that these young pigletswere born totally disease free. And I forget thename of the Lionel something or other. You wouldknow.

Dr. Hurnick: Rhinitis.

Wayne Collins (PC): Rhinitis I believe it is, yes.Could you just comment a little bit on the quality ofthe Prince Edward Island hog today. So that ..Ireally want to make a–impress here on the factthat I think the quality is probably well above, callit the national average. Would you say so?

Dr. Hurnick: Absolutely. The standards that yousaw in the 20's, that farm is now something that’sbeen adopted by the majority of the farmers. Theyare really concerned about disease, disease is akey profit reducing problem. And the health statuson PEI is among, I would say it’s the best inCanada because I’ve worked in other regions andthen Canada stands out in the world so we’vedone our share. The farms are efficient. They have

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fewer diseases, they have--and use fewerantibiotics then is conventionally around the world.All those are good things for the benefit of society.Like I said technically we are really strong.

Wayne Collins (PC): So we have a lot to protecthere, then.

Dr. Hurnick: Absolutely. The reason we are hereis because the markets aren’t working and it’scausing a cash prices. And it’s not because ofsomeone here not doing their job, of not being agood producer. Technically we got all the pieceshere and people come here from around the worldto look at that. We’ve had people that came hereto look at our production system, to buy the pigsthat you are talking about. We stand out. Theproblem is the economics under which we’reworking in the North American cycle really takesthe pricing out of the hands of the farmer and ifyou don’t control the pricing, you become a costcentre and when you become a cost centre thenthe lowest cost producer is the one that staysafloat and if there is a US subsidy on grains, weare not below cost.

Wilbur MacDonald(PC)Chair: Thank you verymuch, sir. We appreciate you taking your time outto appear today and to give us an insight intoAtlantic Veterinary College. I thank you very much.

Dr. Hurnick: Thank you.

Wilbur MacDonald(PC)Chair: I think we will haveone more before we take a little break. ReddinFarm Equipment. I see John is sitting here.

Unidentified Member: (Indistinct) .

Wilbur MacDonald(PC)Chair: Yes do you wantthem to come now. Can you wait...

Unidentified Member: (Indistinct) .

Wilbur MacDonald(PC)Chair: Oh okay. They arehere on my...after Reddin’s they are next and wewill take the two of them up together. Okay. Weare going to have a little break before then, is thatokay. Five minutes, just five minutes just soeverybody can stand up, you have to stand uponce in awhile.

Part X - Reddin Farm Equipment, John Reddin

Wilbur MacDonald (PC) (Chair): Okay, Johnyou are on.

John Reddin: Thank you very much for theopportunity today. I will try and make this as briefas possible. I’m sure everyone is interested in abreak.

I represent a family business of 30 years, startingin 1974 and we currently employ 30 plus peopleyear round. There are some extra employees thatcome on in the summer season, with lawn careand maintenance, et cetera.

We do sell and service farm equipment across theprovince. Getting to the, I guess, the roots of theproblem are what we are finding in our industry isobviously reduce sales. The growers, theproducers in all sectors of agriculture are not reallyinterested in talking to any equipment salesmenunless it’s a dire need.

There is also extreme pressure on accountsreceivable. The number I don’t think is nearly asimportant as the days seen in receivable in 30days are not what we see these days. We areseeing plus 90, 120, 240 and it goes on.

As well the inability of our customers to makepayments to the credit companies. Most of ourfinancing is done by John Deere Credit; some isdone with the banks. Incidentally, when acustomers defaults and sooner or later they go toa Farm Debt Review Board, in almost everysituation that I’ve seen in the past number ofyears, when it comes to that situation, it’s not--thefarmer doesn’t lose his equipment in an equitysituation. I referr to it as upside down and bymeaning that there is no equity in it. The cost ofwhat’s owing is more then what is in theequipment. That gets tied up for a number ofmonths and I am in that situation right now with aproducer, who is a hog producer and a potatoproducer. Is it their fault? I don’t think so. I thinkthat the key word here is that it is a crisis and it’s acrisis for us as a supplier cause in these situationswe are not in an equity situation either.

The finance company does not take the hit, it’s onfull recourse to our company and that comes out ofprofit. In most times, the bank will ask theconsumers or the equipment or anybody involvedin business today if you want more and it’s not aviable business solution, you have to dip into

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equity, if there is equity. At that point in time thebanks no longer will go along with it because thereis nothing for them to get their hold on. And I thinkthat’s a bigger issue for the banks in Bay Streetthen it is on a local level. On the local level I don’tbelieve.. I think they are being directed by headoffice and there’s not a whole lot they can do.Whether they want to, whether they may befriends, neighbors or what have you.

We are seeing customers not repairing theirequipment either. Our parent company will alwaystell us in a downturn, your sales may suffer butyour parts and service side of the business willincrease. We are not seeing that. Mostly becauseof the mood. The mood is so desolate anddesperate that they don’t want to spend moneyperiod and they’ll make due unless it’s dire ornecessary so that doesn’t go along with thecorrelation.

One of the biggest concerns that I have as ahopefully as a long term equipment supplier in thisindustry is the future. I’ve been involved quiteheavily in the Atlantic Apprentice Program fortechnicians. The number one problem we have inour business today outside of a crisis situation isnot selling the product, it’s staff issues. There aremore and more pressure all the time on the staffand to keep a--you can go and find automechanics on a regular bases. You can findpeople who work in a parts department from theauto because everybody has a car and everybodyunderstands that a car has an engine and atransmission, but from the farm side of it it’s muchmore complex. You need to know the specificthings and you need to be trained on them. Weinvest heavily in computerization and our companyis pushing that all the time to be more efficient.Laptops, mobile units this kind of thing and ofcourse that attracts young technicians but itdoesn’t attract young technicians because we can’tafford to pay them as highly as the auto industry.

The issue is why would a young technician want toget into this business? The farmers are walking inthe door to the parts counter, telling everybodyhow bad it is, so why would you want to--just likethat young lady said, why would she want to beinto this business and it’s an emotional thing andI’m concerned about where do I find the futuretechnicians to support my customers.

In a lot of cases, our parts ...in all cases our parts

arrive on a monthly bases. Our company is--wedon’t even have to write them a cheque anymore,they have gotten very automated, they take it outof our account. Our accounts receivable, we do notsee that in the 30-day platform so we are fundingthe parts that we would sell to our customers.

What if my workers go to other industries, wheredo I go and how do I support my customers?Today it’s going to be the person that can providethe best service to get the business. Cost is anissue, but service is also a cost that they have torecognize and I will say that our company and ourparent company recognize Prince Edward Islandtrade area as one of the best areas in Canada. Ithink they would go on record and say that.Industry sales and market share wise has beenvery good for our company and as a result I agreewith our Dr. Dan there with the--his opinion on howfarms are run. The farms are run extremelyefficient, farmers don’t spend hundreds ofthousands of dollars on equipment because theywant. It’s a need, it’s a necessity. It’s always a jokethat these people will spend this kind of money,but it’s done for an efficiency basis and with theextreme decline in farms, someone is picking up--that land is still being farmed for the most part andit’s being farmed because they are larger.

The concern I have is that today the farm votecarries very little weight. What I see is 30 yearsago a farm was a large family and husbands andwives and brothers and children worked on thatfarm and that was the main source of income andfarms were much smaller and much morepowerful. Local MLA’s drop by for a visit, theycertainly listened. I’m not insinuating that you donot listen, but certainly the bureaucrats andthe–and there are a number of politicians thatunderstand that environmentalists, the localperson on the street gathers a much stronger votethan the farm and that’s a shame. We constantlyhear on the news all the time that this is thenumber one industry in the province but we suredon’t represent it that way when it comes tosupport.

With regard to our long term business plans,immediate expenditures have been cut. We will notlayoff unless absolutely necessary. I can’t afford tolose an employee, because they are very hard toreplace. Infrastructures, our infrastructure haschanges have been put on hold, whetherexpansion, looking down other avenues, the local

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guy that called me if I was interested in tradingtrucks or adding some of the older ones that wehad; we are not interested. It sends out a badmessage, if we could afford to and I don’t think itsprudent business to do so. If I’m feeling it that wayyou can imagine how my customers are.

I think long term we need to modify and measurethe industry. It’s a shame that it takes a crisis toget us in this room and to get this kind of grouptogether. As a company we have to monitor howwe are going to handle our receivables. We arethere to support our customers but we have tosurvive. We also have to look at how we budgetour expenditures over the next few months, fewyears, et cetera.

The--my opinion on what can be done. I really donot know what specifically can be done. I’m not inthe political realm and I do gather that there isextreme amount of red tape when it comes topolitics in general. It seems that it’s always oneside verses the other and very little gets done tome. I do know that when there is a hurricane ormassive snow storm that things get taken care ofvery expediently. Otherwise if it’s a situation likethis and I assume we are calling this a crisis.Every time I read the newspaper or watchtelevision or radio, we are talking about a crisis.

In my mind, a crisis means immediate attentionand I haven’t seen that from government; I haven’tseen it from federal government; I haven’t seen itfrom anyone. Probably the banks are the worst tobe picked on. In my discussion with a number ofbanks, not even my own, the banks seem to bethere for the customers. What I’m hearing from thebanks is this crisis is no fault of anyone farmer. It’s not a situation where it’s bad management ormismanagement. It’s an issue that everybody inthis room is in the same boat. It’s not just oneindustry. I’ve never seen this industry, thisagriculture industry like this where you got thepotato sector, even the dairy sector, the beef andthe hogs and of course the US dollar. It’s neverbeen seen. It’s like the hurricane we saw lastyear. But I think we need immediate help. Stopgap maybe, when a price goes below a certainlevel is in order.

The sad part about all this is that the media will getthis on the news tonight and the radio andeverybody will talk about what was brought uphere today and politicians will get jabs back and

forth about who did what and who didn’t do what,but the sad part is is that the general consumerand I think that may be changing with the recentmedia exposure of these issues, but the generalconsumer look at the farmer like they have theirhand out again, and again and again. The farmersare proud, they are hard working. They don’twant their hand out and I don’t either. I believe insolid business plans and making a profit. But whenthese things are outside of their control, we justfinishing hearing how these efficient theseoperations are and I see them, I see everyone ofthem and they are very impressive.

However how can you continue to put money, likeyou really got to put your hand on your heart whenyou hear someone who is willing to expand in amarket like this. The sad part of the whole thingthat everyone needs to get across is where is thesuccession plan? Where is it for any of thesefarmers? Where is it for the feed supply people,for the farm equipment dealers, for anybody that isdirectly correlated to this business. Who wants toget in this? Talk to my employees. How excitedare they going to be because as much as I can tellthem that we’re going to be there, there is so muchnegativity in this industry, what are they going tobelieve?

Tape No. 7

John Reddin (Cont’d): I think the message hasto come across to the consumers and I guess Ihold the press accountable and I think they’ll dothe job for us, is that the farmers aren’t just lookingfor a hand out, they’re looking to make a decentprofit for a lot of work. I think if you looked at whata farmer makes as far as a living on an average ofhis career or her career, you’d probably work it outthat they work for minimum wage. I don’t thinkthat’s acceptable given the risk and the challengesthat they’re faced with.

Now Mr. Arsenault, you mentioned to the bank,you asked if he was willing to commit for the next12 months. I would ask you folks are youinterested in committing as a government?Because to me, if you don’t carry this message,and I mean carry it forward, we’re in for a lot moremeetings and it’s not just about the deficit today,it’s going to be extreme because we’re going to beaffected by every sector in this economy. If in factthis is our largest economy on the Island.

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That’s all I have. I’m sure I could go on and on. ButI think the message to get across is the mood isvery grim in all sectors of the agricultural industry,not just hogs. But hogs have been taken on thechin time after time and I think some of these chainstores need to be held accountable, but in theinterim they need money and they need it fast. Isthe answer subsidy? Is the answer writing off loansas a cash infusion? Yes. It’s all those things. I’mnot much for, as I said for not a solid businessplan, but I do believe that the answer, our USpartners are the most subsidized nation in theworld as far as I know. To me that nation is thelargest and the strongest in the world. So what arewe missing?

Their economy is not strong right now. But believeme, their economy will bound back and they willmake us look like not much of an economy, notmuch of a country. It’s a damn shame that wedon’t have stronger correlation with our agricultureacross Canada, because of our land mass,because of what we produce and what our toolsare. Subsidies, what’s unemployment insurance?It’s a subsidy. What are all these things? In a downeconomy they’re an incentive. To write off loans, Idon’t know if that’s the answer. I think in this caseit’s gone so far that it may be the answer. Becausethese people are at the brink and if something isnot done, and I mean fast, what I’m fearful of isthat the red tape of government will take this so farthat it will be too late. I know Ron is just waiting toask a question but I think I have the answer to it.How fast? Right away. This afternoon. Like you’vegot to get this message across to the House. Iknow that the province can’t make decisions forthe federal government but on a local interimbasis, yes, we have a deficit and things are notrunning too well in government right now. But arewe prepared to take the risk of what is going tohappen if we let it go any further?

So thank you very much.

Wilbur MacDonald(PC)(Chair): Ron has aquestion for you.

John Reddin: Ronnie has a question.

Ron MacKinley(L): I don’t have that much. Youtalk about a crisis and I’m glad that you recognizeand you brought up a point that I never thought ofwas the hurricane that we had or the majorsnowstorm we had, they looked after very quickly.

Another word for crisis, I would call it a disaster inthe agriculture community of the province. I thinkit’s gone from crisis to--I remember talking to yousix or seven months ago when we were in thecrisis then and you were very optimistic that thething would turn around, because you’re very goodbusiness people. You’ve been in it for years andyou have good customers. But I’d say we’re in adisaster right now. Would you agree with that?

John Reddin: Absolutely. I remember thatconversation and I’ve had a number of them sincewith the Hon. Ghiz, Mr. Ghiz. Things haveculminated since then. And I realize, I don’t meanto paint a simple picture. I realize that in asnowstorm or hurricane that things have to happenfast. But it goes to show you that you can jumpoutside the red tape and make things happen. Andwe seem to trip over our shoelaces time and timeagain because of this problem or that problem.Let’s fix the problem with cash and our farmers willfix your problems of a deficit. Because I’m quitesure that their cash receipts, although they aredown this year, will correct the problems of thisprovince. Maybe, just maybe, we should look athow we spend our taxpayers’ money.

We seem to be able to write off money left, rightand centre for any other industry and we can’t doit with the farmers. It just puzzles me why this canhappen because I’m not 100 per cent sure whatthe numbers are with–I do believe I have the cashreceipts. Cash receipts were up 3 per cent and theoperating expenses were up 4 per cent. So that’smy part. I’m the expense part. And my numberslook pretty much similar to this but their total netincome was down 83 per cent. What does that tellus as a body? There is something very wrong withthis picture. I think it needs to be studied and Ithink what you’re doing and what you have beendoing is great. But the message, hear me loud andclear, they need it now. They don’t have time towait.

Wilbur MacDonald(PC)(Chair): Robert.

Hon. Robert Ghiz(L): I take it your business overthe last couple of years in terms of cash has beengoing down and down in terms of total revenue peryear?

John Reddin: In cash receipts?

Hon. Robert Ghiz(L): Yes.

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John Reddin: Our cash receipts were up last--oursituation is-- it’s hard to measure a year becausewe have a year end in the middle of the year.However, our cash receipts are down dramaticallythis year obviously. I don’t think there is anybodyin the province that can’t say that. I think if you goto the men’s store down the street, they’ll tell youthat. I think it’s a direct correlation.

Honourable Robert Ghiz (L): Your John Deereis a franchise?

John Reddin: Yes a dealership, yeah.

Hon. Robert Ghiz(L): So you probably go away toconferences and what not.

John Reddin: Not this year.

Hon. Robert Ghiz(L): Not this year, but in otheryears. For example if you’re talking to some otherfranchise dealers perhaps who live in the Stateswhere they are subsidized. Down there are theystill doing well?

John Reddin: Yeah, the States are doingextremely well and the demand for equipment isstrong in the United States, especially for newequipment and a lot of that is correlated to the USFarm Bill. A local later presenter I’m sure willindicate that. But the ironic part is, we had madcow and we had it in the province of Alberta. Italked to a dealer, a friend of mine in Alberta, thiswas back, it was Christmas time, mid December.I was out delivering gifts to customers areChristmas time and he called me up. We weresuppose to have a dealer meeting. I wasn’t goingbecause of this situation. Like we’re not doinganything that is deemed not necessary. I askedhim how things were because obviously in mymind, and this was really before things reallystarted getting serious. I asked him how are youfinding things. He’s in Calgary. Big, big cattleoperations. Not bad,. I was very puzzled by that.How could it not be poor. He said well we havereally strong grain prices this year and he said ourcustomers still have places to go with cattle. Ourfarmers have to truck them to Montreal or Torontoand we have one plant to truck them to.

Like we fail dismally to support this provincialagriculture. Farmers will put an animal, this is nothog related, but on a beef scale, farmers will putan animal on a truck and the loss from the time

that the animal leaves here to the time it gets to itsdestination can be huge. It seem ironic to me that--when I’m in the Farm Centre last week and I seethis Farmer Hall of Fame and the great pioneersthat are in this province and farming and we’ve letit run down to this level and no beef plant. Like thebeef plant is coming but it’s too little, too late, guys.

Wilbur MacDonald(PC)(Chair): Ron, you haveanother question?

Ron MacKinley(L): Yeah, just another questionfor you. So you’re referring to the hog industry andalso to the beef industry when you talk disaster.

John Reddin: I’m talking about all the industry.

Ron MacKinley(L): All the industry.

John Reddin: Potatoes.

Ron MacKinley(L): All right.

John Reddin: All industries. The immediate rightnow to me is the hog industry. But there are someprograms for--’m not up on all the programs, butfor cattle, there may be a little light at the end ofthe tunnel. But this beef thing has been relativelyokay over the past number of years. But I reallydon’t understand why my customers stay in thehog business. Because I wouldn’t want to beat myhead against the wall time after time after time.Nobody has done, out of all the industries, wellmaybe the potato industry, but maybe not. I thinkthe hog industry has done the best job ofmarketing their product, whether it’s going to theCulinary Institute a few years ago and they put thispush on for pork. Because the general consumergoes to the store, I watch them when I’m in thesestores...you don’t go and say, let’s have some porktonight. It’s let’s have some steaks. So there is amarketing issue there. But they’ve worked veryhard on correcting that. I think they followed thelead of the dairy industry.

But the upsetting part for me as a consumer, I’lltake my agriculture related hat off. But theupsetting part is when I go into a local grocerystore and I can’t buy a product, meat from thisprovince. I didn’t know that until you guys reallystarted to drill into this. That makes me sick to mystomach to think that that’s the case. Because Istarted to check into it a bit more and as a resultnow, I don’t buy any meat, period, from these

44

stores. They’re not worthy of the business.

What Mr. MacDonald is speaking of with this meat.I bought a box of meat at the hockey rink the othernight from a customer and it was a box, like youcould put a set of encyclopedias in it. So it was agood sized box. They’re an inch thick steaks andhe charged me $50. Do you know what $50 wouldget you at the grocery store? A quick walk throughthe line up because there wouldn’t be much to ringin. That’s the disgusting part of this whole thing, issomeone is raping and pillaging these farmers andit’s not me. Because they’ll take care of me realquick because we get enough competitors. Butwho’s taking care of these people that are sellingproduct at the end?

Wilbur MacDonald(PC)(Chair): Thank you verymuch, John. You brought up a good point. Ronyou have another question?

Ron MacKinley(L): Yeah. So the dairy farmersare affected a certain percentage for their cowsthat they can’t market, their cull cows. The cow/calfoperator hasn’t got any assistance yet. The feedlot operators have got some assistance. The hogindustry is in dire needs as we see here and thepotato industry, I’d say by about 50 per cent. Fiftyper cent of the potatoes are contracted toCavendish and McCains I believe. So there is 50per cent roughly of the potatoes out there that aregoing to show a profit or close to it. So we’relooking at--do you have any farmers that are 100per cent non-contracted?

John Reddin: Yeah.

Ron MacKinley(L): And how are they finding it?

John Reddin: They haven’t moved any productyet.

Ron MacKinley(L): They haven’t moved anyproduct.

John Reddin: I don’t know how they’re going todo it. I really don’t know how. The thing about thisis, what does the bank do? What can they do forthese people? As far as the potato industry, whathappens next year with contract prices and wheredo they go with this product? I was out on the roadwith a sales person today and he was telling meabout a customer of ours, I believe they were onthe news last night and they put an ad in the paper

to get rid of potatoes. Like what does that say?You can talk about over production in thisprovince. This province is so small in theproduction of potatoes. I know we’re getting off thetopic with potatoes but it is not even a drop in thebucket. If we drop our production in this province,all we did is give Quebec or Manitoba or Albertamore markets.

Ron MacKinley(L): Well the state of Idaho grows330,000 acres, I believe and we grow 100,000here. If we cut back 30 per cent....

John Reddin: We’ll just give them more markets.

Ron MacKinley(L): We’ll just give them moremarkets.

Wilbur MacDonald(PC)(Chair): Thank you John.I appreciate you taking the time. (Applause)

We’re going to take five minutes, just five minutesokay. So everybody can stand up. I invite youpeople to stand up, stretch. That’s about all wehave time for.

Mr. Fitzpatrick, do you want to come up. We’ll getyou up in front here. We’ll have to wait until we getenough back? Do you have anybody with you?

PART XI - Beaton Fitzpatrick and MurrayChartered Accountants: Gerard Fitzpatrick

Wilbur MacDonald (PC) (Chair): Fitzpatrick andMurray Chartered Accountants and we have Mr.Fitzpatrick. Would you like to proceed, sir.

Gerard Fitzpatrick: Mr. Chairman and committeemembers, my name is Gerard Fitzpatrick. I’m withthe Chartered Accountant firm Beaton Fitzpatrickand Murray in Charlottetown. I started this firm 27years ago in 1977. I grew up in the hog industry,what would have been a fairly significant farmoperation in those days, not probably by today’sstandards. There is presently 24 families gainingan income out of our business. We have a largeclient base in the agriculture sector and we do asignificant amount of business with the hogindustry as well as businesses related to that.

The current crisis not only affects the hog industrybut it affects a lot of our other clientele, namelyfarm machinery dealers, machinery repair shops,contract and building suppliers, hardware and tool

45

shops, auto dealers and feed companies. Wespend a fair bit of time and have in the past andhope to continue in the future to assist farmers inmoving on to the next generation and continuingthe livelihood that has supported this province.But we, as advisors, have extreme concern aboutthe equity of the retiring farmers being erodedquickly to the point where they may not get toretire. I don’t know what they do if they don’t get toretire.

There is a significant lack of cash flow for the nextgeneration to finance the take over and that couldspell for disaster, not only for the industry but justas important for the future of farming generationsthat this province has been built on. This willobviously have an adverse effect on the demandfor our services in this area of the practice and it’svery difficult to advise clients on the long termgrowth in the hog business when prices areconsistently below the cost of production. Somedays, logic says, get out. But that is not always thelong term alternative to those involved and to theprovince in general.

What should be done, the industry and the generalpublic through their agent, namely the government,want and need a stable cash flow model thatworks not only in the good times but in the bad, inorder to ensure the survival of the industry, plusthe survival of rural PEI, not to mention jobs in therelated industries. The one thing that I will say thatis not necessarily happening not only here but inthe rest of the country, that my concern is thatsomething will be designed and it will not bedesigned by listening to the people in the industry.That’s been demonstrated time and time againfrom programs with holes you could drive trucksthrough, to programs, by the time they deliver themedicine to the patient, he’s already been throughthe funeral home and buried.

So I’m saying that do not design a program in acloset. Design it with the people that know theindustry, that are involved in the industry. I thankyou very much for your time and please ensurethat the effort demonstrated here today will not bea waste of Islanders time or their way of life. Thankyou very much.

Wilbur MacDonald(PC)(Chair): Thank you verymuch, sir. Any questions for Gerard.

Gerard Fitzpatrick: The one thing I might add,

that I’m the 14th presenter, being short is a plus.

Ron MacKinley(L): Well I think, Mr. Chairman, it’sprobably our committee’s fault, all of us, and I’msome to blame, if we have other committeemeetings we should make sure we don’t havequite as many presenters because there is a lot ofquestions to ask and it’s nobody really to blamebut us on the committee. I don’t blame thechairman or the clerk but we knew what the line upwas. But there is so many interesting facts comingout here that a person has got to spend quite a bitof time asking questions. Probably some timespeople didn’t get to ask a lot of questions.

Wilbur MacDonald(PC)(Chair): Any questions forGerard?.

Wayne Collins(PC): Mr. Fitzpatrick, what is yourestimation, your professional estimation herebased on your own business and your clients whoare involved in the hog industry and fromconversations you have with your colleagues in thechartered accountancy of the percentage of Islandhog farmers who may be, from an accountant’sview point, I don’t know, I use the phrase in peril,financial. . .

Gerard Fitzpatrick: That’s the easiest questionI’ve had in this past week, 100 per cent. That’show serious it is in the industry. You cannotcontinually operate an operation where whatyou’re selling costs less, or you sell it for less thanit cost you to produce it. Getting a bigger truckdoes not solve the problem. Putting a debt load onat a prime plus 1 does not solve the problem, it’sthrowing a ring, a cement ring to somebody that’sdrowning. Cash flow is important and cash flow isking in the current situation. But the long termsituation, there has to be a plan in place that’sbeen designed by the industry that the industryagrees with that makes economic sense. Onceyou loose the jobs, once you loose the nextgeneration of farmers, you will not be getting themback.

Wayne Collins(PC): You mentioned in yourpresentation the need for, and you just mentionedagain, a stable cash flow model designed by theindustry with those various criteria . Do you haveany specifics to offer to that yourself?

Gerard Fitzpatrick: I have all kinds but I’m surethe industry has done that research and I wouldn’t

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attempt to steal their thunder and I think that theyput a lot of effort into it and will present somethingto this committee that will probably makeconsiderable sense.

Wayne Collins(PC): We would hope.

Gerard Fitzpatrick: And hopefully the committeewill listen.

Wilbur MacDonald(PC)(Chair): Fred. Okay Ron.

Ron MacKinley(L): Yes, just one thing. As youbeing an accountant, the hog producers told usthat this federal/provincial program CAIS I believeit’s called. . .

Gerard Fitzpatrick: Yes, it is.

Ron MacKinley (L): . . . wouldn’t help them andthis is a program that you watched our federalMinister of Agriculture, Bob Speller, you watch ourfour MP’s and you also watch our Minster ofAgriculture here and our Minister of Financesaying well this program is in place and thegeneral public out there think they’re doingsomething for the farmers. Now the reality is whenthe hog producers came in, said that it wouldn’thelp them. What’s you opinion on that?

Gerard Fitzpatrick: The issue with the CAISProgram, it’s a very simple, no, I will not use theword simple and CAIS in the same sentence. It isa program that is based on the previous averagesof your farm. If your farm has been in crisis forthree years; if you’ve been losing for three yearsand the only way you can get assistance is toloose more money, it may prolong your death, butthe death is still certain.

So I’m not saying it will not help but it is not asolution to an industry that has been in a crisis, ina poor situation for the past five years. It will onlyhelp those that are up and down.

Wilbur MacDonald (PC) (Chair): Fred

Fred McCardle (PC): That was my question.

Wilbur MacDonald(PC)(Chair): Okay, I have justone question. You talk about a plan in place,you’ve been doing books for a long time. Do youthink that plan has to be a national one basically?

Gerard Fitzpatrick: There is some merit to thatexcept for the cost of production in otherprovinces. If you take your hog industry, forexample, the input cost and there’s lots of peoplehere that are far better qualified to speak to thatthan me. The input cost to a hog industry in awestern province or an Ontario province is far lessthan it is here. So therefore, those things have tobe factored in and they can’t be factored in, in anational basis. It takes a lot of federal politiciansthan federal bureaucrats three weeks to determinethat they should have a meeting. So this industrywill not stand the test of that.. I guess I keep goingback to the thing, the future of my employees andthe future of my business rests on people stayingin business. I do not gain long term survival byhelping people out of an industry. I survive byhelping people stay in an industry and continue togrow in the industry. That also applies to thisprovince. So we will become a bigger have notprovince if we lose some of the basic industrieswhich is agriculture and tourism and I think it’s verycrucial that people realize that could happen.

Wilbur MacDonald(PC)(Chair): Fred, for a finalquestion.

Fred McCardle(PC): Under the CAIS Program,the first payout is half producer and halfgovernment. The government, is it federal orprovincial?

Gerard Fitzpatrick: The program is set up that ifyou have a drop in your average, the top 15 percent of that drop is 50/50. The next 15 per cent is30/70 and then the crisis portion is 20/70 betweenthe farmer and the government. My understandingof the funding of that it’s 60/40 of that on thegovernment share.

Fred McCardle(PC): Federal 60/40.

Gerard Fitzpatrick: My concern with the CAISProgram is it has not been--it should be deliverednow and it’s not going to be delivered for a whileyet.

Fred McCardle(PC): Well if the banks know it’scoming, it’s a whole lot better.

Gerard Fitzpatrick: If the bank knows it’s coming,it’s a whole lot better.

Fred McCardle(PC): There is one beef producer

47

in my constituency who is going to get $119,000out of that program. That is a lot of money.

Gerard Fitzpatrick: Depends on how much youloose.

Fred McCardle(PC): It’s a whole lot better than--.it’s a lot of money.

Gerard Fitzpatrick: The program is there to help,there is no question it’s a help. It’s not a long termsolution.

Ron MacKinley(L): Why is it that you said thatWestern Canada and Ontario, central Quebec Iguess, why is the input costs so much different. ..?

Gerard Fitzpatrick: Again Ronnie, the issue onthat can be better addressed by costing expertsbut you’re sitting right next to cheap grains that wedon’t have here. We got to truck everything in andwe got to truck most stuff out.

Wilbur MacDonald(PC)(Chair): Thank you,Gerard. We appreciate you taking the time tocome here today. (Applause)

Would Clayton and Eric like to come up together.

Tape No. 8

Part XII - Eric Artz, Roy Artz and ClaytonBulpitt, Producers

Eric Artz: My name is Eric Artz and this is mybrother Roy. Clayton Bulpitt, these are twodifferent presentation.

Wilbur MacDonald(PC)Chair: Sure I agree withthat.

Eric Artz: So who goes first?

Wilbur MacDonald(PC)Chair: Yes, and we cantalk to you all together.

Eric Artz: Alright.

Clayton Bulpitt: Okay, Mr. Chairman, members ofthe committee. I want to thank you for thisopportunity.

My name is Clayton Bulpitt and I own and operate,along with my family, a farrow-to-finish operation inRoseneath.

I have been running this operation for over 40years, and I am now very proud to have my son,Philip, a young farmer as a partner in thisoperation. Incidentally, Philip is a fifth generationfarmer on our farm operations so it’s been in thefamily a lot of years and has provided us with anexcellent source of income up till about the last fiveyears.

I want to talk about how hog prices have affectedour operation. I will first talk about my first 35years, and then about the next five years andfinally about the past year. Each has been a verydifferent time in the same industry.

The first 35 years in which I was involved in hogproduction were good. As part of the price cycle inthe hog industry, we had times when we receivedvery good prices. These were also followed bytimes of poorer prices. Overall, we weathered theups and downs and made a good living from ourfarm operation.

The next five years, which is in reality the last fiveyears that we’ve been through, have showed thestart of a serious downturn in our industry. The lowpoint came with disastrous prices in 1998. Thatyear, at the bottom of the price cycle, our returnsrepresented a cash loss of 80 to $90 per hogmarketed. During that time, every hog producerexperienced large losses and accumulated a largedebt.

The following years between 1999 and 2004,showed continued low prices with the exception ofa short period in the year 2001. As a result thedebt load for all Island hog producers hasincreased to the point where we are today.

The prices we received in 2003 are almost as badas those that we received in 1998, which was ourdisastrous year. As a result, hog producers are stillcarrying a very large debt. If this debt load is leftunchecked, a lot of producers, through no fault oftheir own, and in spite of many modern upgradesin the hog industry will be forced out of business.

On our own farm, the debt load is three timeslarger than it was five years ago. This occurredwithout any expansion. This additional debt was

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caused by one reason alone, by us coveringlosses experienced in the marketplace during thattime.

In response, we have reduced our maintenanceand our repairs to the bare minimum. We havetaken a very small part out for our labour. Despitethese and other measures, we are still losingmoney. This is not a very encouraging prospectfor my son, Philip and his generation of futureyoung farmers as they begin to establish a careerin agriculture.

One must realize that as a result of the price ofhogs today, an industry that has contributed somuch to the economy of PEI, to employment andto the health of rural communities will soon be shutdown.

Just to give you an example, with the price of hogsat $1.50 which is only a break even price, thereturn to Prince Edward Island economy is around$30 million. It is estimated that the level of cashreceipts from a farm has a spin off value ofapproximately 1 to 7. That means that the hogindustry contributes some $210 million annually tothe provincial economy. That will be lostcompletely if the industry shuts down.

Even if 20 to 30 per cent of our hog producers areforced to go out of business. Garden ProvinceMeats will be put in a position where they will beunable to operate. If the plant closes, more than100 well paying, year round jobs with an annualpayroll of more than $4 million will be lost.

As with a lot of hog farms, the current cost ofproduction on our farm is in the range of 150 to$155 per hog. This covers only out of pocketexpenses and a very minimal labour cost and doesnot even allow to begin for capital costs orrepayment of debt accumulated over the last fiveyears.

In 2003, the average return on a market hog onour operation was $123. That left us with a 30 to$35 short fall on a bare bones cost of production.

Over the years, 1998 to 2003, our average returnper hog was $135. By comparison, the averageprice we received a number of years ago over afive year period from 1992 to 1997 was $151 perhog. This is getting back actually ten years ago.During that period of time, I should point out that

our expenses were much lower than today. Thecost of hydro, buildings, machinery and equipmentwere a lot less than there are today, thus the totalcost of production was much lower.

From these examples, it is evident that hogproducers and the businesses associated with hogproduction are indeed in a crisis situation.Farmers, like all business people want a fair returnon their investment and labour and a decentstandard of living for their families. This is not thecase anymore.

Where do we go from here?

The provincial government has tried to support theindustry to some degree and for that I say thankyou. But we continue to have several majorproblems.

First of all, there is the current hog crisis which hasto be addressed very soon, not just for the sake ofthe producers, but as well for the grain industry,the feed mills, the trucking companies, theemployees, the processing plant and the Islandeconomy in general. I see nothing short of animmediate cash infusion into the industry that willhelp the short term problem.

The second problem is one that is very difficult forwe as producers, to solve. It is also one that isvery difficult for the provincial government to solveon their own. It will require a joint effort witheveryone in the industry and with all levels ofgovernment working together.

We have been caught up in a cheap food policy, afree trade agreement and a global commoditymarket. All of which impact on prices. Theincreasing value of the Canadian dollar has furtheraffected our competitive position. In fact this yearwith the change in value of the Canadian dollaragainst the American dollar, it reflects in about a21 per cent decrease in the returns that we get atthe marketplace.

It is well known that European countries offset theircheap food policy with subsidies to theirproducers. In the United States, the AmericanFarm Bill offers significantly more support to itsfarmers than Canadian farmers receive from theirgovernment.

One cannot help but think that the Canadian

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government seems to be using the issue of freetrade as something to hide behind to justify its lackof support to the country’s farmers. At least that’sthe way I see it from our backyard.

Canada produces some of the safest, highestquality hogs in the world. Here in Prince EdwardIsland, our herd health standards are the best inCanada. We produce a superior product and wedeserve a better price.

The federal and provincial governments haverecently introduced the new Canadian AgriculturalIncome Stabilization program, better known asCAIS. Payouts on the program are based under areference margin, taking into account the previousfive years production costs. However, if you areinvolved in hog production where you have alreadyexperienced five years of declining prices, yourstabilization is based on losing even more money.To become eligible for payments, you have tocontinue to loose money and you have to loosemore of it.

I would suggest that the program be modified torectify--to reflect the unique needs andcircumstances of the hog industry and to a lesserdegree, potatoes and beef. One approach wouldbe to provide funds under the program that arebased on an actual cost of production. That wayhog producers would be given a greater chance atsurvival.

In closing, I want to thank the committee forproviding me with the opportunity to express mythoughts and concerns about the hog industry andits future. Thank you.

Wilbur MacDonald(PC)Chair: Eric.

Eric Artz: Thank you for the invitation to comebefore the Standing Committee on Agriculture,Forestry and Environment.

Along with our parents, we operate a 430 sowfarrow to finish operation and we also grow over900 acres of crops, mainly corn and grain to feedour livestock. Besides what we grow ourselves, webuy a short fall of grains and prepared feeds fromlocal companies. We do most of the trucking of thegrains, manure and fertilizer ourselves. We wouldnot be into farming today if it wasn’t for ourparents.

Our parents started farming in 1973 and built thefarm from the ground up. In 1987, we traveled toPrince Edward Island and decided it would be agood place to farm. We moved here the followingyear. The Island’s great landscape and its ruralcommunity which consisted mostly of family farmsheld great promise for our future in farming.

Our first year here, we added a sow barn for 180sows to our existing feeder barn. At that time,there were a lot of incentives to start a hog farmand great stability within the hog industry. Hogprices were good. There was plenty of feed andmost importantly enough land to spread manure.Somewhat different from what we were use to.

In 1995 after graduating from university. Iexpressed a desire to work on the farm. In orderfor this to happen, we felt we had to expand andour operation went from 180 to 430 sows. A couplemore of feeder barns where built along the way tofinish all the pigs for slaughter. Our hog operationbecame considerable larger and with that a biggerland base was required.

More and more Island fields were being turnedover to potato production as the need for soilconservation measures became increasinglynecessary. This included a lot of our rental land. Itbecame more and more difficult to manage themanure, which increased a chance of harming theenvironment. We made a decision to purchasemore land, giving ourselves the ability to bettermanage our manure. We now spread over a largearea to prevent problems with ground water andhave crops absorbing the manure. However withthe decision of purchasing more land, we also putourselves at a greater risk. Our debts areincreasingly higher as hog prices have decreasedand don’t show any promise of increasing in thenear future as expenses keep going up all thetime. If farmers are paid for their hogs then theywould be better capable to handle changes.Changes other than the price of hogs have alsoproven to be a major influence on farmers, dailyliving.

Farming has been a vital part of living on theIsland since the early 1800's. In the early days thefamily farm was an integral part of the Island’s wayof life. Our parents started farming 31 years agowith the family farm concept in mind, a dream tomake a living and eventually pass that way ofliving onto their children while they themselves

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could retire.

Today agriculture continues to be Prince EdwardsIsland’s most important industry of which livestockraising is an important part. However todaybreeding and production have evolved to becomelarge commercial operations. The dream to retireand to pass on the farm to their children hasbecome a distant one for our parents. It has beengobbled up by increasing demands and expensesin the hog industry and decreasing hog prices.

With the way recent years have been, it will beimpossible for our parents to retire now, let alonefor any future generation to follow in their footsteps. At this rate Prince Edward Island’s oncevital family farms will cease to exist.

We thank you for listening to our concerns andwelcome any questions you may have.

Wilbur MacDonald(PC)Chair: Questions from themembers. Anyone. Robert.

Hon. Robert Ghiz(L): I have a question forClayton. I guess you talked a lot about how theindustry use to be profitable and the CAIS programwas designed over the last five years when itwasn’t profitable I guess they really didn’t listen tothe hog farmers when they designed the program.If they moved it to a ten-year rotation or based itover the last ten years would that help, in terms ofthe program or would have to go even furtherback?

Clayton Bulpitt: It probably gets pretty impracticalwhen you have to base program over that long ofa period of time.

Hon. Robert Ghiz(L): So you’re suggesting aboutgoing with just the cost of production?

Clayton Bulpitt: The program was designed toaccommodate the way the industry used to be uptil about five years ago. You had good points andyou had bad points and level it out. But wheneverything is down hill for a five-year period, theprogram is not effective.

Wilbur MacDonald(PC)Chair: Anyone else. Goahead.

Wilfred Arsenault (PC): Just a quick comment.You had some--I enjoyed the presentation. Both

presentations I enjoyed the comments, especiallythe comments about working together and I thinkif there is any chance of anyone going anywherewith the situation, with the crisis situation that wehave today, you are absolutely on the money, it’sworking together with the industry, with levels ofgovernment and community. Thanks for thepresentation.

Wilbur MacDonald(PC)Chair: One question from,Richard. We don’t mind, Richard.

Richard Brown(L): The CAIS program, correctme if I’m wrong. Each farmer has to fill in the CAISdocument and show his margins and his incomeand loss statement, is it?

Unknown Member: That’s right.

Richard Brown(L): Every farmer has to do it. Sowhy can’t there just be a model, okay here’s thecost of production in PEI and here’s the prices andhere’s the difference, why so much paper work?

Fred McCardle(PC): That was suggested at thistable a week ago. The last time we spoke with theMinister of Agriculture, he was–the hog industrywas considering that, weren’t they Clayton?

Clayton Bulpitt: The standard.

Fred McCardle(PC): Getting a reference point thatmade sense.

Clayton Bulpitt: That’s what the whole problem is.It’s not like you are suggesting. It should be. Tohave a model and a cost of production and base ityour support payments off the cost of production.Instead of a declining average which is actualywhat’s happening in our industry right now.

Richard Brown(L): Is that meeting still going onnow?

Clayton Bulpitt: Who would know, they’re feds.

Richard Brown(L): So you would support aprogram that says in PEI here is what productioncosts--here’s the standard production costs, here’sthe typical profit and loss statement.

Clayton Bulpitt: It’s not the answer but it would behelpful. It would be a vast improvement over what

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we have right now.

Richard Brown(L): So what would it cost you tofill these CAIS documents in and...

Clayton Bulpitt: Gerard would take all you canget.

Richard Brown(L): Gerard takes all he can get –oh, I’m taking business away from Gerard. I guessthat’s my point, I guess Mr. Chairman is, if we areforcing everybody to put in basically the same setof financial statements and I’m--maybe we need aprogram that says here’s the model, here’s whatwe are going to pay and it’s much easier on thefarmer and it’s much easier–and then he has hismodel to base himself against instead ofeverybody filling in the same documents. Thankyo.

Wilbur MacDonald(PC)Chair: We have Fred. Andthen Wayne, okay.

Fred McCardle(PC): What’s happening with hogproductions in other provinces? And are otherprovincial governments doing more for their hogfarmers than we are?

Clayton Bulpitt: I only would be giving aneducated guess on it. I think you could have thismeeting in any province in Canada and the tonewould be very similar. I have a feeling maybe thatQuebec is in somewhat of a better situation. Theydo tend to subsidize their industries a little bit morethan the other provinces. But generally speakingit’s across Canada. We are at a little bit of a pricedisadvantage here on Prince Edward Island. Wedo receive a little bit less for our hogs then NovaScotia or New Brunswick.

Fred McCardle(PC): Is Canada a net importer orexporter of hogs, as a country?

Clayton Bulpitt: I believe it’s an exporter.

Fred McCardle(PC): So everybody in the countryis taking the same hit?

Clayton Bulpitt: Basically and our prices arebased on the American market and on theAmerican dollar.

Fred McCardle(PC): Well is there a bottom to this

cycle? Like there is obviously people exiting theindustry, when is this thing going to turn around?

Clayton Bulpitt: We probably wondered thatabout five years ago, and we are still wondering it.The futures, you were discussing futures marketsearlier. Right now if you had of locked in sixmonths ago futures for today, you would bereceiving probably in the vicinity of maybe a $1.20a kilogram, where the actual price today is about abuck 50.

Fred McCardle(PC): You can forward sell yourhogs?

Ron MacKinley(L): You’d be taking a loss.

Clayton Bulpitt: You’d be taking a big loss.

Fred McCardle(PC): Why did you do that?

Ron MacKinley(L): He didn’t do it.

Clayton Bulpitt: He didn’t do it. If he had of, andtoday you can address the futures markets andlock in your hogs for mid summer at about a buck30 so it’s also hesitant to do that because whatyou have done, you have locked yourself in a loss.

Fred McCardle(PC): Well if you are doing that, theprice is never going to go up.

Clayton Bulpitt: Yes, exactly, my point.

Fred McCardle(PC): Why would you lock yourselfinto a losing position?

Ron MacKinley(L): He didn’t do it.

Clayton Bulpitt: I didn’t do it.

Fred McCardle(PC): There must be people doingit?

Clayton Bulpitt: Apparently.

Wilbur MacDonald(PC)Chair: Wayne.

Wayne Collins (PC): You mentioned back in1998, you were losing was it 80 to $90 a hog.

Clayton Bulpitt: That is in the very worst of that

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particular year. In December of that year for a fullsize market hog ...

Wayne Collins (PC): But the year itself couldn’t ofbeen very good, the whole ‘98' was it. Overall?

Clayton Bulpitt: No, it was a terrible year. Weaverage a $113 per market hog.

Wayne Collins (PC): My question is, how did youget through that looking back on it? What wasdone then for the industry, if anything?

Clayton Bulpitt: Actually the difference was thatwe were--that was the first disastrous year that wehad had. We were coming off a period of two goodyears and even before that the industry had goodtimes and bad times and if you were a goodmanager, you saved up some funds for the badyears. So “98" was, it was devastating but we hadequity, some of us had cash to fall back on. But welost all of that in 1998. This year...

Wayne Collins (PC): Did many go out of thebusiness in “98" looking back on it now or did mostweather the storm?

Clayton Bulpitt: It was a lot less severe then now.

Wayne Collins (PC): Okay.

Clayton Bulpitt: There was some, sure.

Wilbur MacDonald(PC)Chair: Ron do you havea question, with production. Okay Ron.

Ron MacKinley(L): Yeah, some of the problemwith this forward planning or forward contracting.If you go down to the states there are some largehog operations down there, they are all controlledby a large feed companies and everything orprocessors. So what’s taking place is thesecompanies can go out, contract their pork at a lossbecause they are owned by the major feedcompany and the stores and whatever, theprocessors so the cheaper they can get hogsthrough their own plant, they are making it whenthey sell it. But the farmers here don’t get a chanceto do that. That’s why the problem is--is that notcorrect?

Clayton Bulpitt: That’s very correct.

Ron MacKinley(L): That’s the problem, andanother problem we have too, is Mr. Fitzpatricksaid, it’s cheaper to produce pork apparently inOntario and Quebec et cetera because ofgovernment programs, because of cheaper grains,I guess he mentioned and he mentioned also yourpower rates and everything else and this adds allup. Our costs of production is too high in theProvince of PEI, because of government taxes orindirect taxes. I don’t care which government is inpower. I think that’s one of the problems.

Number two is what I see as a Member of theLegislative Assembly and I’ve been here going on19 or 20 years, is when this CAIS program was puttogether, did the hog board here for instance orhog board or whatever you have input into it?

Clayton Bulpitt: Not to my knowledge.

Ron MacKinley(L): What I see is somebody isswitching--like the Department of Agriculture, theminister here was asleep. Our four MP’s wereasleep because this represents the hog industryand including myself as a Member of theLegislative Assembly but we wouldn’t know aboutthese until they are released. But a major mistakehas been made here. You take a loss and you lockyourself into loss as you people echoed here. Theonly way you can collect from it is loose moremoney. So, for instance, the potato industry if youhad a major catastrophe maybe the CAIS wouldwork there I’m not sure, or maybe . . .

Clayton Bulpitt: It’s impacting on potatoes too,because the last five years..they haven’t been assevere as the hog industry, but they have been ona down trend.

Ron MacKinley(L): Yes they have been on adown turn. But still and all there should be somemoney recuperated there. They take out the highand the low and they go with the average for thelast three years, those three years.

Clayton Bulpitt: Which in our case is considerablybelow the cost of production.

Ron MacKinley(L): See what they have inOttawa, they got a Commons up there and I reallydon’t even blame the provincial government hereon this one. They have a Commons up there tofigure out how they can put on a spin onto themedia that the farmers are being looked after and

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actually go back and drink coffee and say well wedidn’t give them anything. Basically what’s goingon. And we here don’t have, we here in theprovince. . .

But we here in the province haven’t got theexpertise in order to know these programs. I don’tthink we have an expertise in agriculture. Look atthe mess we had when that gas well, they couldn’teven read the gas reports, there was no gas thereand Wayne MacQuarrie said, well I’m hopingthere’s going to be something. Twenty pounds.The thing is– no, but I’m just saying we have aproblem here and we had a problem here with thepremier when some of these developers came in.I told him he should get outside help in order todeal with some of these developers that walk awaywith these millions of dollars. I don’t blame thepremier, I don’t blame Mike Currie and them, theydidn’t understand what they were dealing with, andthat’s where we have a problem and now we havea problem.

This committee has very little weight when wemake a recommendation to the federalgovernment. I suggest we keep the pressure on toour MP’s. There’s a federal election coming up.But this program for hogs should be rewrote underthe CAIS program, if anything should be done. AndI mean you can’t get at this bunch, they’re in foranother three years so you might as well. . . Butthe fed’s sure get after them. You might as well putit right to them because I have already been onWayne Easter and them but that’s what I see, Mr.Chairman.

Wilbur MacDonald(PC)Chair: Maybe we shouldmeet with some of the MP’s? Maybe that’s one ofthe things we can do. I’m going to call it now because we do have thelast one on the Income Crisis Committee and theyhave been very patient. We appreciate youcoming, we thank you very much. Applause.

Tape No. 9

Part XIII - Income Crisis Committee: LezaMatheson-Wolters, Jean and Walter Clark,Guy Cudmore, John Earl, Walter Clark, JimDoyle

Leza Matheson-Wolters: First of all, as Chair ofthe Income Crisis Committee and a member of the

board, I would like to thank you for once againhearing us. I’d also like to thank the producers andany of the feed companies and other businessesthat have traveled again for probably the third time,we sincerely thank you from the Hog Board andthe Income Crisis Committee and the producers atlarge for being here today.

Wilbur MacDonald(PC)(Chair): Would you like tointroduce your people with you, or have themintroduce.

Leza Matheson-Wolters: One thing that wasn’t onthe docket that we would like to add is, it has beenmentioned today here, if we’re going to invest inyour industry, what’s the forecast? And I’ve heardthat several times here today and I would like toread to you a statement that we asked for, theIncome Crisis Committee from the Larry Martinwho has a PhD and is the CEO of the GeorgeMorris Centre. So I would like to--.we asked himthe question, what is the forecast? Is it going tolook any better? Is it going to look worse? We’dlike to share this statement with you from theGeorge Morris Centre.

Wilbur MacDonald(PC)(Chair): Could you explainwhere is the George Morris Centre?

Leza Matheson-Wolters: It’s in Guelph, Ontario.At the request of the Income Crisis Committee thisstatement reflects the analysis of Kevin Grier,Senior Market Analyst of the centre and myselfregarding the market for Canadian hogs in 2003and its prospect for 2004. The market in 2003 - theproducers indicate that on average, the industryhas not prospered for the past six years. Normally,given the nature of the hog cycle, the final of thosesix years, 2003 should have been relativelyprofitable. However, three factors made it muchworse than it should have been in Canada. TheBSE outbreak, this had the unexpected effect ofincreasing the demand for beef and reducing thedemand for pork in the summer months. Andduring that time, beef prices were low. Thecombined effect was to place downward pressureon hog prices in Canada. The potential formandatory country of origin labeling referred to asCOOL in the US, the fear was that if COOLbecame mandatory in the US, that it would havereduced the demand for Canadian wiener pigs andslaughter hogs in the USA.

This led to the beginning of a build up in swine

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breeding herds in the US to supply more pigs andto build up a new finishing facilities in Canada toreplace the market in the US. The net effect wasmore hogs and lower prices in North America. TheCanadian dollar, our estimates are that the swingin the Canadian dollar in 2003 made a lossbetween 18 and $22 per market hog during thesecond half of this year. Had any of these thingsnot hit the industry in 2003, producers would havebeen much better off.

Prospects for 2004- by the typical North Americanhog cycle, 2004 should be the peak of prices. Thereactions to COOL as noted above, likely causedan increase in supply in North America and willcontinue to do so in 2004. However, by keepingprices lower than expected, COOL likelyencouraged some producers left the industry andothers will not enter or expand.

US reports indicate that there will be fewer hogsmarketed here - there in 2004 and we do notexpect expansion in Canada. The worst of theBSE problem should be over in Canada so thatnegative effect will not be a factor. The fact thatBSE has now occurred in the US as well as therecent outbreak of the bird flu, thereby reducingUS exports of beef and chicken to a number ofcountries means that there is a strong domesticand off shore demand for North American pork.Putting this data together, our announcement isthat the hog price in the US will be at 12 to 15 percent higher in 2004 then in 2003. Canadian priceswill depend on the US price and the exchangerate.

If it continues to rise then Canadian hog prices willnot increase as much as US prices and vice versaif the Canadian dollar falls. The value of thecurrency will be largely determined by relativeincrease rates in Canada and there is growingevidence that the Bank of Canada will reduce rateshere versus the US. If so, we expect the Canadiandollar to fall or at least stop rising. Therefore, wefeel comfortable in forecasting that Canadianprices will rise by at least 12 to 15 per cent that willbe seen in the US bearing some unforseen marketcatastrophe.

So I just present that to you today before we startour presentation.

Now, Mr. Chair, we will introduce the people at ourtable.

Jean Clark: Good after, I’m Jean Clark and this ismy husband Walter and we operate a hog farm inKinkora.

Thank you very much Mr. Chairman. The PrinceEdward Island Hog Marketing Board, the IncomeCrisis Committee and producers at largethroughout the province, sincerely welcome theopportunity to come before you today.

At the outset, we want to express our appreciationto others who have made presentations here todayin support of our industry. In times of crisis andneed, it is always heartening to know that youhave friends. To those who stand by us, we saythank you, for without your support we could notcontinue.

Farming is a business, but it is also a life callingand in many ways agriculture is the heart of PrinceEdward Island. Other industries make their ownsignificant contributions. However, agriculture hasdefined the province, socially, culturally andeconomically for more than two centuries. Like oursister resource industry the fishery, agriculture hasbeen the chosen vocation of generations of Islandfamilies. Indeed, many of the farmers who haveappeared before you today acquired theirknowledge and skills from parents andgrandparents and make their living on farmspassed down to them.

Our Island farms are held in trust by onegeneration for the next and they represent adynamic and living resource that is important notonly to the men and women and children who workthem, but to all Islanders. They are the very heartof the much heralded Island way of life andconstitute a landscape that is market to thousandsof tourists each year.

Prince Edward Island cannot afford to loose itsfarms and yet Island agriculture and the hogindustry in particular is facing an income crisiswhich threatens to put many farming families out ofbusiness for good and irreparably damage theeconomy of the province.

Mr. Chairman, we estimate that over the past sixyears, our producers have sustained a total loss ofabout 17 million or $15 on every single hogmarketed. Few industries could have weatheredsuch economic adversity and survived. But ourequity and other financial resources have been

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depleted, our determination is waning and the hogindustry now is in a state of rapid decline. Webelieve the crisis can only be addressed and theconsequences averted by strong and specificaction on the part of government.

We come before you today with heavy hearts andminds, not as complainers looking for thatproverbial handout, but as hardworking membersof our Island community who have been caught ina vicious economic spiral. It is not one of our ownmaking. Island hog producers are careful andefficient managers and we remain committed toimproving both our industry and overall economyof the province. But we need your help. Werespectfully ask for and expect the support and theassistance of government who we have elected torepresent us.

Guy Cudmore: Mr. Chairman, my name is GuyCudmore. I’m a hog producer. I farm in Winsloewith my brother and also sit as a member on theHog Commodity Marketing Board. We are awareMr. Chairman, that requests for financialassistance by the agriculture industry are oftenviewed skeptical by government. And we knowthat the government is faced with escalating costsand numerous budgetary demands. As farmers,we have been accustomed to hearing the publicanswer. We can’t afford it. But we say to yourespectfully, we can’t afford to loose the Island hogindustry. Our Island economy can’t afford the loss.It has been estimated that from 1998 to 2003 thehog industry has generated a cash flow into PrinceEdward Island of more than $160 million.

This does not take into account the processingsectors salaries that GPM nor large quantities ofgrains and other consumables which the hogindustry requires. Clearly the farm cash receiptsand the direct and indirect economic spinoffsmade by the Island hog industry and major cashcontributor to Prince Edward Island economy.

The other response that Island farmers have beenaccustomed to from government when asking forfinancial assistance, has to do with theinternational trade and the potential for countervail.Frankly, Mr. Chairman, we believe that this issomewhat of a red herring issue. There is nocountervail action against Canada at the presenttime. Furthermore, what is mainly at issue here isthe shipment of live hogs into the United States,not the export of pork from a kill and chill plant

under a supply agreement. Canada won the lastcountervail test. Furthermore, the United States isconcerned primarily with national subsidies, notassistance that might be provided to hogproducers in our small province.

Prince Edward Island produces only 200,000 hogsout of a total of national production of 25 millionhogs in Canada produced each year. We ask thatyou keep things in perspective around the issue ofcountervail.

There is a low probability that a decision by theprovincial government to financially assist theIsland hog industry in its current crisis would bedeemed countervailable. On the other hand, thereis a high probability that without such immediateassistance, the Island hog industry will collapse.In these circumstances, Mr. Chairman, we expectour government to act bravely on the side offarmers. We expect our government to do the rightthing.

John Earl: My name is John Earl and I farm withmy wife Debbie and our three children in Kingston.We raise hogs there and that’s just in behindRonnie’s farm.

Out of the current five programs listed in PrinceEdward Island Hog Analysis 2004 which isproduced by the Provincial Department ofAgriculture, Fisheries, Aquaculture and Forestry,only the SQUIP program, that’s the Swine QualityImprovement Program directly puts dollars into thepockets of farmers.

Under the SQUIP Program, Island hog producershave demonstrated their adaptability to the everchanging from demands of the market place. Thiswas achieved through compliance by obtaining anincrease from 50 per cent in 1996, to 80 per centin 2003 and by producing a consistently highquality product for consumers. But instead ofrewarding success, funding to SQUIP has beenreduced significantly over the same period. I thinkit started out at $8 a hog years ago, correct me ifI’m mistaken, and now it’s down to $2.25 a hog.

Government has provided cash loan assistance tohog producers in the form of the Hog Bridge Loan,which you’ve heard a lot about. This wasintroduced in 1998 following a devastating drop inprice. The formula on which this program is basedallows for a $5.00 bridging loan for every $10

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decrease in market price, with a current repaymentrate of prime plus 1 percent. While the Hog BridgeLoan does assist with cash flow, it has depletedfarm equity and increased liability and placed hogproducers in an even more vulnerable financialposition. Moreover, given the terms and conditionsof a pay out threshold of $1.40 and repayment of$1.60, we have to start paying back the $1.60, anda break even point of production which wecalculated at $1.60, any cash flow that’s createdgoes to servicing the debt of a bridge loan. That’sall it does. It doesn’t help in any other way.

Mr. Chairman, hog producers find themselves in aperpetual operating deficit, falling further behindwith each month.

Walter Clark: My name is Walter Clark and withmy wife, we farm in Kinkora. On February 13th,2004, the Island hog industry held a grassrootsconference to deal with this disaster situation. Themandate of the round table sessions was toidentify short and long term solutions, first for thesurvival of the industry and then for itssustainability. The Income Crisis Committee thendeveloped a proposal and took it back to theproducers on February 23rd for approval.

The solutions and actions that I am about topropose have been given much thought andconsideration. We are convinced that without suchimmediate and decisive action by government, theIsland hog industry will not survive.

SHORT TERM SOLUTIONS: Firstly, we stronglyrequest that immediate changes be made to theterms and conditions of the existing Hog BridgeLoan; change repayment threshold to $1.90;change loan trigger to $1.60; no payments fromNISA, CAIS or other similar assistance programsused to reduce the loan; repayment of principalonly; proposed changes to be retroactive toSeptember 1, 2002, with exception to changes toloan trigger to commence April 1, 2004.

Secondly, we ask that government make a directinfusion of cash into the hog industry payable tothe producer at $20 per hog marketed in the year2003.

Thirdly, we recommend that changes be made tothe GPM loan deferral schedule and interest rate;deferral payment schedule changed to $1.60 andunder; interest rate capped at 5 per cent for the 18

months to year 10 period retroactive to January 1,2004.

Fourthly, we request that our government endorsethat a letter of credit from a financial institutionreplace direct deposits from the farmer to theirCAIS account.

Finally, we ask that the province support hogproducers in their request to the federalgovernment to have financial institutions deferloan payments until such times as prices return to$1.60 per kilo.

LONG TERM SOLUTIONS: Mr. Chairman, theseare the immediate actions we believe necessaryto address short terms needs, but clearly theremust also be a long term vision and plan to ensurethe future of the Island hog industry.

We realize this will require a great deal of furtherstudy and analysis and to this end, we ask that theprovince and the federal government make fundingavailable to contract a professional consulting firmto work with the industry to develop acomprehensive, long term strategic plan. Wealready know that certain priority issues must beaddressed by this comprehensive strategic plan.

Revamp the CAIS Program with the input anddirect participation of Island hog producers at thenational policy making and decision making levels;introduce a stabilization program; develop atransportation policy; consider adoption of anational moratorium on expansion policy; developtraining programs to achieve skilled and long termlabor; introduce more vigorous promotionalprograms; develop an industry exit program.

Jim Doyle: I’m Jim Doyle and I bought the farm inAuburn. Today, Mr. Chairman, we stand united asan industry. Today we speak with a commonvoice, one that we hope will be respected andlistened to by government.

Over the past nine years, the number of hogproducers on PEI has decreased by more than250, while the production of hogs has increased byapproximately 580 per week. Island hog producershave risen to the challenges of market place. Wehave increased production while maintaining apremium product level. We have achievedoptimum efficiency.

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Hog produced have hope for the future. Asforecasted by Larry Martin, CEO of the GeorgeMorris Centre, based on the analysis of KevinGrier’s Senior Market Analyst, Canadian prices willrise in 2004. We do believe that the industry willrebound.

However, because of circumstances beyond ourcontrol, we have operated in a deficit position forthe past six years. We simply cannot continue thisway.

Please believe us, Mr. Chairman, we are notcrying wolf simply to attract attention ofgovernment or to exaggerate our plight in an effortto secure unnecessary financial assistance. Mr.Chairman, the crisis we are facing is real. We arecrying wolf because the wolf is at the door.

Without the immediate help of our provincialgovernment in the ways we’ve outlined today, theIsland hog industry will be no more. Many of us willloose our homesteads, our livelihoods and as aresult, others in the Island business community willalso suffer. Hundreds of people will be put out ofwork and our provincial economy will lose millionsof dollars. You are our elected representatives, themen and women chosen to develop andimplement public policy and to guide and to guardthe interests of our Island province.

Islanders support our farmers as evidenced by thesupport in this room today. We ask that youexercise your authority as elected representativesand that the Standing Committee and thegovernment show leadership by endorsing ourproposal.

The Hog Marketing Board is holding its annualmeeting on March 5th. We are requesting a closeddoor meeting with your committee, the ministerand deputy minister, the day prior to our annualmeeting so that our members will knowgovernment’s response to our proposal and we willbe able to plan a future course of action. Thankyou.

Wilbur MacDonald(PC)(Chair): Ron and thenRobert.

Ron MacKinley(L): First of all I want to thank youfor your report. I want to thank you in the shortperiod of time to come up with short termsolutions. As you know, long term solution is not

going to be easy but a short term solution can bedone here in the province.

So with that, Mr. Chairman, I make motion that we,the committee meet next week as soon aspossible. First we file a request that an immediatechange be made to the terms and conditions toassist in the Hog Bridge Loan Program. Changesrepayable threshold to $1.90, change loan triggerto $1.60, no payment of principal only, proposedchanges be retroactive September 1st, 2002 withthe exception of changes to loan trigger tocommence on April 1st, 2004.

Also in the motion, secondly we ask thegovernment to make a direct infusion of cash intothe hog industry payable to the producer at $20per hog marketed in 2003. Thirdly, we recommendthat changes be made to the GPM loan deferralschedule and interest, deferral payment schedulechanged to $1.60 and under, interest rates becapped at 5 per cent for 18 months to 10 year,retroactive to January 1st, 2004 and number four,I’m skipping the fourth part there. But number four,finally we ask that the province support hogproducers and request to the federal government to have financial institutions, loan defer paymentsuntil such a time as prices return.

Now, by making that motion here, basically I thinkthat’s the motion, and just a little background on it,the reason I’m making the motion here is thatwe’ve studied this to death and you people havetoo. You can come in with recommendations herethat something has got to be done. Everybody hasbeen before us. I don’t expect anybody to debatethe motion today. I want the motion to be debatedat the next meeting. But in that motion, to havethis meeting as soon as possible to debate thissubject and decide what we’re going to do. It’s notgoing to be my idea, it’s going to be thecommittee’s idea. But this way we can short circuitthis right through to Cabinet and we can report tothe House. The House is not closed, justadjourned for a period of time and I’m sure thatCabinet, if they don’t get it through the House, theycan get it through the papers or we can handdeliver if the committee so decides. In the longterm, let’s see a later date.

So I brought that motion to the floor. TheCommittee will have to discuss when we can--wehave meetings scheduled for next week, is thatright?

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Wilbur MacDonald(PC)(Chair): Yes we have.

Marian Johnston(Committee Clerk): March 4th isour next scheduled meeting.

Ron MacKinley(L): What date is March 4th?

Wilbur MacDonald(PC)(Chair): Thursday, Ithink.

Ron MacKinley(L): Well then we could have ameeting then Tuesday or Wednesday. We havelots of time. I know the MLA’s....

Wilbur MacDonald(PC)(Chair): We have ameeting with the minister on Thursday.

Ron MacKinley(L): What?

Wilbur MacDonald(PC)(Chair): We have themeeting with the minister next Thursday.

Ron MacKinley(L): Yeah. But all I’m saying is,that if we can get this committee to agree to this,when we meet the minister we have a thing laidout for him to take back to cabinet. If we meet withthe minister, all we’re going to do is get into theCAIS Program. We’re going to get into somethingelse. He’s going to say how bad things are. Weknow how bad things are. Let’s get somethinggoing here and let’s see what we can do. Weheard from the banks. They want something donein April. We heard from the machinery companies,April. March is here, I want that motion--I’m justgoing to let everybody get lots of time to take ithome and think about it. I’m not trying to pull a fastone or anything like that. I want everybody to havetime to think about this motion. So I ask that themotion be deferred and brought up at our nextmeeting which we’ll decide and we should be ableto get one in on Tuesday or Wednesday.

Wilbur MacDonald(PC)(Chair): We’ll decidewhen the next meeting will be after. Any morequestions to the committee? Robert.

Hon. Robert Ghiz(L): Thank you very much. Iagree with Ronnie’s motion and I’m just going tobe--basically I’m going to give some advice herebecause unfortunately I’m not in government rightnow so I can’t make the final decision on thisanyway. But in terms of the process that we’rebefore right now, I take it that you need money as

soon as possible. If we wait until June, July,August or next September, there is going to be alot of hog producers going out of business. Rightnow the process that we’re before with thiscommittee, is this committee will write a report, thereport will then be submitted to the House once theHouse opens. It’s got to be debated before theHouse and then it’s got to go to Cabinet.

What I propose is done and it’s done throughRonnie’s motion here, is that this committee has tosit down before cabinet as soon as possible andmake their presentation to cabinet. Becausesometimes, I think it was John Reddin who saidtoday, sometimes you got to go through all the redtape and forget about it and that’s what has to bedone here. Because guess what? If we follow theexact procedures that we have to follow with thiscommittee, it’s going to be too late for you guys.I’m just being honest about it. I’ll tell your rightnow. Not that the committee is useless or not, butguess what? You’ve done an incredible job overthe last couple of months. This committee hashelped to be your spokesperson area for you andnow it’s time to take this to where it has to go andthat’s going to be before Cabinet and before thePremier so that they can make a final decision onthis.

Basically if we wait until this goes to the Houseand we debate it on the House, there is going tobe hog producers out of business because I’ll tellyou right now, we’ll be into May or perhaps June.By the time cabinet sits down and debates, whoknows when it will be.

Tape No. 10

Hon. Robert Ghiz(L) (Cont’d): So you have tosit down before Cabinet go through this sameproposal. We’ve got the media attention now thatyou so desperately need. You’ve got the publicperception on your side. I think exactly throughRonnie’s motion here that if ..then we take thatmotion to Cabinet and you get to do yourpresentation before and you are going to knowexactly what the answers are and it’s not that Idon’t think that this committee is relevant orwhatnot but under the circumstances I use to be alobbyist in a previous life. That would be the adviceI would give you but so far I think you’ve done anabsolutely incredible job over the last number ofmonths in bringing your issue to the forefront.

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Wilbur MacDonald(PC)Chair: Fred.

Hon. Robert Ghiz(L): So no question thereobviously.

Fred McCardle(PC): Well I do sympathize withyou people and I know that your story is real. ButI don’t know what these changes are going to costthe government. But I know 200,000 times 20 is $4million. And I sit around this table on Fridaymornings at Caucus and there is a resolve in thisgovernment to cut expenses and you found outthat we are even going to get less money fromOttawa then we had budgeted by $24 million.

Hon. Robert Ghiz(L): (Indistinct) that’s correct.

Fred McCardle(PC): ..so.

Ron MacKinley(L): On a point of privilege, Mr.Chairman, ....

Wilbur MacDonald(PC)Chair: You will have time.

Ron MacKinley(L): Point of Order is the motion ison the floor. Motion...

Wilbur MacDonald(PC)Chair: We have themotion, okay I’m sorry.

Ron MacKinley(L): Alright the motion is on thefloor. The motioner doesn’t need a seconder andwhat I’m saying is whatever you guys thoughtsare, you people thoughts are here, you persons,bring it to our next meeting and debate it. I’m notasking anybody to debate it. I’m just putting themotion on the floor to be discussed it as early aspossible deal. We are here...we are not even todiscuss this...

Fred McCardle(PC): Nobody seconded themotion?

Ron MacKinley(L): You don’t need a seconder. Idon’t know where you’ve been. Where have youbeen? Go back and read the rule books, here,take it read that. I’m getting tired of this. But I’mtelling you this.

Fred McCardle(PC): Mr. Chairman, when am Igoing to talk? This Point of Order is done.

Ron MacKinley(L): No it’s not. I’m explaining it

out the Rules of the House to you. Now ...

Fred McCardle(PC): This is not the House.

Ron MacKinley(L): It is the House, this is theextension of the House. What do you think it is?Where have you been.

Fred McCardle(PC): Mr. Chairman, when do I geta chance to talk here?

Ron MacKinley(L): You get a change when I’mdone. Now we have a lot of people, Mr. Chairman,here if anybody has any questions to ask on this,you can ask some questions but you can’t startdebating the motion because it has been put off.

Fred McCardle(PC): I am not debating the motion.

Ron MacKinley(L): So you ask some questions.

Fred McCardle(PC): Generally I’m trying to helpthese people.

Wilbur MacDonald(PC)Chair: I am going to takethe meeting back. You made your motion, fine. Weare going to debate it. Now it’s Fred’s turn,followed by Wayne, followed by you again.

Ron MacKinley(L): No we are not debating themotion here.

Fred McCardle(PC): I’m trying to help thesepeople. I’m not trying to make political hay here.

Wilbur MacDonald(PC)Chair: You made amotion that we...

Ron MacKinley(L): And it’s deferred, now Fredcan ask any questions whenever he wants or if hewants to go on. . .

Leza-Matheson-Wolters: I have a question if youcould put me on.

Wilbur MacDonald(PC)Chair: Sure.

Fred McCardle(PC): Mr. Chairman, I’m generallyjust trying help these people. I’m not trying to frontmy own political opportunism here. We are notgoing to get $4 million out of this government.

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Ron MacKinley(L): How do you know?

Fred McCardle(PC): Go back to CAIS and rewriteit. Now...

Leza-Matheson-Wolters: Can you repeat thatslower to me.

Fred McCardle(PC): Go back ...rewrite CAISprogram now..

Leza-Matheson-Wolters: No I mean the first partof your sentence?

Fred McCardle(PC): Well you are not going to get$4 million out of this government.

Unidentified Member: You’re one member of thegovernment.

Fred McCardle(PC): Exactly.

Leza-Matheson-Wolters: Are you speaking onbehalf of your government?

Unidentified Member: That’s quite a statement tomake at this table, respectfully, sir.

Fred McCardle(PC): Do you want to talk fairytales or do you want talk the truth?

Leza-Matheson-Wolters: We are not talking anyfairy tales, sir, with all due respect.

Fred McCardle(PC): Well I’m trying to suggest--you might get half of the $4 million. I don’t knowwhat our government is prepared to do. But Iknow, my caucus members are going to supportme here, am I right guys.

Why don’t you address the--amending the CAISprogram now, so that 60 per cent of these dollarscan come from Ottawa.

Leza-Matheson-Wolters: I’ll wait till my question.

Wilbur MacDonald(PC)Chair: Okay, do you wantto have Wayne to ask the question and then, okay,Wayne.

Wayne Collins (PC): Mr. Chairman, I just want topoint out that I think things have been taken a littlebit out of kilter. We’ve been here all afternoon

since 1:00 o’clock and we’ve been hearingpresentations from people coming forward withsome very good things and very interesting thingsto say, very provocative things to say and oncethey finished their presentations, we’ve gone intoa question and answer session with each of thesepeople. And what the honourable member fromNorth River-Rice Point has done, has tried to turnthe apple cart upside down here and I think he’sbeing extremely unfair at this point. There aremore presentations to come and this is thequestion I wanted to ask. In the spec of hisuntimely motion and that is what is on the agenda,what is planned for the next meeting of thiscommittee on March 4th, am I correct?

There are other people, other presenters to thiscommittee on this issue and on the other issuesthat we’ve been mandated to look at including theBSE and it’s effect on the Island cattle industry. Soto say here today that we should automatically, ournext meeting of this committee devote all ourdiscussion time and there will be all our discussiontime because that is a monumental motion withtremendous financial implications for this province,that will require a great deal of research betweennow and then to dedicate ourselves to that motionat that meeting and then to turn our backs onothers who are scheduled to be presenting hereand to not give them the full benefit and attentionof this committee as we have done herethroughout this afternoon, I think would be adisservice to those people who have yet topresent.

Ron MacKinley(L): Mr. Chairman, I entertained amotion (Indistinct) report. The motion is coming upin the next earliest possible meeting. You debateit then, that’s the rules of the House. If you gotquestions to ask, ask the question. The motion’salready been gone through. You don’t need aseconder and we are bringing it up at the earliestpossible convenience and that’s probably nextMonday, Tuesday, or Wednesday. We are noteven talking our next meeting being scheduled.We have to decide when we can get this in.

That’s the way the House works. Talk to thesepeople.

Fred McCardle(PC): Well these people (Indistinct)March 5th, they want an answer by March 4th.

Wayne Collins (PC): Mr. Chairman, does not the

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motion have to be placed on an agenda?

Wilbur MacDonald(PC)Chair: We have it on theagenda for the next meeting. Is it agreeable to thecommittee. That’s what we’ll....

Wayne Collins (PC): That’s the question. No onehas asked whether or not that it is agreeable toplace that motion either on this agenda today or onthe agenda of the next meeting?

Wilbur MacDonald(PC)Chair: Can we have Lezasay a few words.

Leza-Matheson-Wolters: Before I ask myquestion. I just want to make a short statement. Ireally find this disheartening. I really do becausepeople have taken their businesses, there’s beentourism, there’s been financial institutions, there’sbeen numerous, unbelievable amount of workwent into this proposal today and to throw yourarms up and start fighting between each other andsay well, no you are not even in, well you get, wellyou might get half and you are one member. Likethat’s really hard for us as a committee that ourelected officials right away on the heels of us allday sitting here and going through this.

I would just like to say if we could just calm it downa bit. Because we are very upset people. We arebroke and we are here to ask for help and we’vespent a lot of time and a lot of hard work puttingthis together. To make irrational decisions reallyquick on behalf of people, on behalf of 27members. That’s really hard for our industry. Weare hard workers and we didn’t come here withirrational thoughts, so if we could just take a stepbackwards and ..like just let the last few minutes .. .

Wayne Collins (PC): Not that I don’t want tocontinue the debate thought. We didn’t start this.You had from the presentation and I must say Iwant to compliment all of you on an absolutelyeloquent presentation. I really feel that your heartsare in the right places here, you’ve got the rightprospective, it grabs my attention and my interestand my concern for this industry.

Leza-Matheson-Wolters: I’m not pointing fingers,but it was from both sides, like one says rightaway, right of the bat, first thing, well you are notgoing to get that out of this government becausewe’ve got a deficit. You have over a billion dollar

budget. Are we a priority, Mr. McCardle? That’swhat I ask of you today.

Fred McCardle(PC): I don’t make those decisions.

Leza-Matheson-Wolters: Well you just madethem a minute ago. Anyway like I don’t want topoint fingers. I don’t want it to be a we/they issue.We are farmers and we just need some help andwe need to be taken respectfully..

Fred McCardle(PC): How easy is it for you tocome out here and say you want, well four million(Indistinct) the $20 and you want an answer nextThursday. Is that realistic?

Leza-Matheson-Wolters: Yes, sir it is. Because. . .

Fred McCardle(PC): Take a walk, I mean, wakeup.

Wilbur MacDonald(PC)Chair: Okay, Richard.

Richard Brown(L): First of all, Mr. Chairman. . .

Leza-Matheson-Wolters: Pardon me, sir.

Richard Brown(L): I agree.

Unidentified Voice: That’s out of order, That’s outof order.

Richard Brown (L): Just let’s cool it.

Unidentified Voice: (Indistinct)

Wilbur MacDonald(PC)Chair: Richard has thefloor. Please.

Richard Brown(L): First of all, I want to thank thecommittee for coming forward today and I knowthey’ve worked on this for a long time and Iunderstand that the department has helped out inthis.

Leza-Matheson-Wolters: This presentation? Nosir.

Richard Brown(L): No, sir.

Leza-Matheson-Wolters: This is by the

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committee and the industry.

Richard Brown(L): Did you ask the departmentfor assistance or help?

Leza-Matheson-Wolters: No, sir.

Richard Brown(L): First of all Mr. Speaker. I gotto commend Fred for what he is saying. This is thefirst indication that we’ve had today of whatgovernment is thinking. I got to commend Fredbecause you know it may not be what we want tohear. But at least you are telling us. We have aminister that tells us nothing. We have a ministerthat spends more time on the televisioncommercials, only time I ever see him is at 6:00p.m. and 10:00 at night. I commend you on whatyou’ve said. When he comes the next time, that hehas says what you guys are discussing and put hiscards on the table and let’s hear what the solutionsare. But you can’t shoot the messenger here. Fredis the messenger and maybe not--and this iswhat’s being discussed and maybe he might bethrown out of Caucus first. But I support his weightin what he is saying and expressing an opinion onwhat the government is saying.

All I’m saying, Mr. Chairman is that when theminister decides to come to this committee, like heshould of last week and maybe hopefully he’llcome next week that he has solution and he tellsus what is being discussed. Okay let’s not comehere and just say to these people...the PR linesthat yes, we are listening, yes we understand whatthe industry is saying. We have a concern too andwe are listening but it is the federal government’sfault or somebody else’s fault. I will help you. WellMr. Chairman, and when you guys get in caucusFriday morning okay, tell them to come here okay.Because Fred, quite honestly I commend what yousaid cause this is the first indication that we’veheard. And these people have made a tremendouseffort here and if the government would say tothem, here is the perimeters we are working in, tryto do a solution here. Those lines and we’ll talk.

Anyway that’s my suggestion, Mr. Chairman, thatthis happens next week. I don’t want to hear fromthe minister next week, all is rhetoric about yes, weare listening, we are doing this, we are doing this.I want to hear what he thinks and what thegovernment is willing to approve or not approve.

Wilbur MacDonald(PC)Chair: Wayne. I mean

Fred, I should of called.

Fred McCardle(PC): I want to make it clear thatI’m not a decision maker in this government andwhat I say is my opinion. I’ve been elected fourmonths, I’ve been farming 28 years like don’t makeany rash judgements on whose side I’m on here.But I know there’s a lot of decisions coming beforecaucus and this is--there are other issues right upthere with yours. There’s a lot of hurt out there andthere’s a lot of people want government funds, butI’m not a decision maker of government andmaybe the minister will come in here nextThursday and say, here’s your cheque. But . . .

Wilbur MacDonald(PC)Chair: I just want toreview here for a second. We do have committeesmeetings set up, Ron, and you know that. I justwonder if maybe your motion should be held untilwe have those meetings. In all fairness to thepeople who are coming, some are coming fromoutside of the province and some are coming--andI know your hearts in the right place and you wantto, but we have an obligation to meet with thosepeople unless we cancel everything.

Ron MacKinley(L): No, we’re still, Mr. Chairman,(Indistinct) I took the short term solution to make amotion that we go and discuss it. I don’t even knowwhat the outcome is going to be of that. This is justa discussion paper here–a motion, discuss it nextMonday, Tuesday, Wednesday, or Thursday,trying to get rid of some of this red tape. Theseother people are still coming in. There’s long termsolutions. We don’t even know if we will come outwith an agreement on this. Like I know forinstance, no payment from these--I cut that out. Idon’t believe the bank can guarantee your NISApayments, there’s a rule there.

Leza-Matheson-Wolters: (Indistinct) .

Ron MacKinley(L): Can they now? So that’s beenchanged. But I went to the ones that we could lookhere and get it off discussion and to have adiscussion ourselves here on this, like we are notoverly worked. We are only meeting once everyweek. I think we had one meeting last week but wecan come and these people have some goodprograms and this is what they’ve asked for. So allI want is the motion to be discussed at our nextearliest possible meeting. I don’t mean when yougot those people coming in either. I’m talking a

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meeting before that or whether--what time is ournext meeting at, Madam Clerk? 1:00 o’clock.

Marian Johnston(Committee Clerk): Thank you.Our next meeting of this committee that isscheduled right now, is March 4th, next Thursday at10:00 o’clock and what we have on the agendaright now for that meeting is a presentation fromthe Minister of Agriculture, presentation fromAgriculture Canada, the New Democratic party. . .

Ron MacKinley(L): That’s fine.

Marian Johnston(Committee Clerk): ..and therepresentatives of the grocery stores.

Ron MacKinley(L): Well, that’s fine, but see whatI’ve suggested here was to meet before that. Likeon a Monday, Tuesday, Wednesday or Thursday.That has got to go through the committee in orderto agree to meet on that. I put the motion through.

Wilbur MacDonald(PC)Chair: Okay.

Ron MacKinley(L): And the motion will bedebated but the thing is--what all I ask for was thisbe brought up earlier than those meetings, I knowwe have a schedule for that time Thursday, but Ican’t see why maybe we can meet on Wednesday,maybe–we decide that.

Wilbur MacDonald(PC)Chair: We’ll discuss thatafter, okay. Let’s get back to our--any questions forthem. Go ahead Leza.

Leza-Matheson-Wolters: I have a question. I’mstill looking for a response to the last three lines ofour presentation and I don’t believe that I’m veryclear on that as of yet. So I’m just asking for apoint of clarity, because we do have a meeting onMarch 5th, an annual meeting and we do need todecide what course of action we need to make ourplight a little stronger maybe.

Wayne Collins (PC): I was going to say I dobelieve that this discussion has gotten sadlysidetracked here because we have not dealt withyour request here, which is the final three lines ofyour presentation, which raises some interestingissues actually. Because as I understand it, acommittee, a Standing Committee of the Houserarely goes behind closed doors except when itgoes to write its report.

Wilbur MacDonald(PC)Chair: We can go incamera anytime .

Wayne Collins (PC): Does it go in camera?

Wilbur MacDonald(PC)Chair: Any time.

Wayne Collins (PC): So this would not be inanyway a ....

Unidentified Member: Breach.

Wayne Collins (PC): A breach.

Wilbur MacDonald(PC)Chair: No.

Wayne Collins (PC): Alright, I just wanted to beassured of that. But you know, in terms of the nextmeeting of this committee on the Thursday, 4th ofMarch at ten in the morning. That still allows us anopportunity if we wanted to, at that point, todiscuss whether or not we should be fulfilling thisrequest in the afternoon of Thursday, the 4th ofMarch. I mean then the committee could make itsdecision in direct response to what your group isasking and in that way, I don’t think we can startinvolving ourselves in a very--in the motion that thehonourable member has put forward here. I thinkthe idea is to pose questions to you now as wellbut also to take into consideration at our nextmeeting whether or not we should do this becauseit is the 4th of March, it’s either that afternoon or notime before your annual meeting the next day.

Leza-Matheson-Wolters: That’s correct, sir. Iguess the whole . . .

(Indistinct Comments)

Wayne Collins (PC): I realize that, yes.

Ron MacKinley(L): I have a question....

Wayne Collins (PC): What I’m saying it’ssomething we should consider as a final point oron the agenda of our meeting on Thursday, March4th is to discuss this request, and to either acceptor reject that request.

Leza-Matheson-Wolters: Mr. Collins probablymade the most sense of anybody here thisafternoon in terms of after the presentations, so Ithank you for that and I think it’s getting to a level

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where we are actually talking now instead ofthrowing and communication is one of the biggestfactors in any negotiation process so I thank youfor taking it back to a communication place.

Now that we are there. The mind set of thecommittee was not in anyway to force in hand butwhen we were scheduled to meet here today andwe did have an annual meeting on the 5th, I dorespectfully submit to you that I do understand inyour busy lives of representatives of our industry,of our province rather as elected officials that thatis a rather tight time frame for you. I understandthat. I also understand and we (Indistinct) and welooked at it, what the presentations were yet tocome on due to strong cancellations. Looking atthat docket, I don’t personally feel that there isanything that would be said on that day that wouldcause you any less of a plight that’s been heretoday to hear our story.

So in term of yes, of hearing the others out, thegrocery marketing who–we’re looking at pricegouging, in terms of the New Democrats which Idon’t think they are going to go against the Islandfarmers because their platform is built on Islandfarming and the rural economy. So in havingweighed that, I think we’ve presented enough heretoday in our own right for you to take this and havea closed door session as it reads and maybe Iwasn’t clear when I wrote this. Because of thediscussion that followed, we are asking that youmeet with this committee, with Minister MacAdam,his deputy and your committee behind closeddoors. This doesn’t have to be the 4th, we areopen anytime, you want to go the 2nd or 3rd we aregreat with that, if that day doesn’t work for you. Butit’s to talk around the table and to look atnegotiations and what you can live with as agovernment and what we can live with as anindustry versus sustainability and for notimmediate devastation. And then we do have onthe 5th if we have some perimeters around that,can we live with it yes, can we? Do we not, andwe have to take our plight one step further inpublic? Maybe.

Wayne Collins (PC): So, if I may interject. Is itagreeable then that this, with you that if thiscommittee were to put on its agenda a discussionon the 4th of March, it meets at ten in the morningto discuss--hear from other presenters, but at thatpoint to discuss as a committee, will we bemeeting or do we want to meet with you again

behind closed doors and invite the minister anddeputy minister to join us. That is something thatthis committee could decide on the morning ofMarch the 4th . Would that be agreeable?

Leza-Matheson-Wolters: I think we are willing towork with this committee, absolutely, but thatdoesn’t meet the deadline of March 5th and if wedon’t have a response maybe we have to decide,like you mean–do I understand you correctly ...

Wayne Collins (PC): This is on the 4th of March,your meeting is on the 5th of March.

Leza-Matheson-Wolters: Yeah, did you say onthe 4th you were just going to table whether youwould meet with us or not?

Wayne Collins (PC): No, I’m saying there’s anafternoon open on the 4th of March. And if it wasthe desire of this committee following the opendiscussion right - if it was the desire of thiscommittee to meet with your group behind closeddoors while issuing an invitation to the minister anddeputy minister to join us. . .

Leza-Matheson-Wolters: Correct.

Wayne Collins (PC): . . .in the afternoon. Thatwould be agreeable to you?

Leza-Matheson-Wolters: That would be correct,sir. I would have to confer with the committee.

Wayne Collins (PC): That’s what I’m asking?

Leza-Matheson-Wolters: Yes, sir.

Wayne Collins (PC): Alright. I would certainly goalong with that. I’m not saying we are going tohave that meeting, I’m saying is it the will of thecommittee? But we would have that discussion inpublic and people would stand in their place andbe counted.

Wilbur MacDonald(PC)Chair: No, we can go into. . .

Wayne Collins (PC): But I’m saying in terms ofthe discussion of whether or not we go into closedmeeting in the afternoon.

Wilbur MacDonald(PC)Chair: Oh I see.

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Ron MacKinley(L): What time does the last(Indistinct) thing of the day.

Marian Johnston(Committee Clerk): I expectwe’ll be done if we work through the lunch hour by1:00 or 1:30.

Ron MacKinley(L): 1:30, so we can meet afterwith the committee and the Minister of Agriculturebehind closed doors, if the committee so desires.That’s why I put this resolution on to get thisdiscussed because basically the recommendationsdon’t come from the minister. Therecommendations come from our committee so ifwe have this committee meeting as you peoplerequested with the minister and we go in there.He’s going to come back and there isn’t going tobe too much done there either. Because there’sonly one minister in cabinet. So why I wanted tohave this other one, speed it up like Monday orTuesday or Wednesday was in order to find outwhat this committees feeling is when they go inwith–to meet with the minister behind closed doorsand the deputy. Do they back this? Do we notback this? These are questions we got to ask.

Leza-Matheson-Wolters: That would be theprerogative of your meeting (Indistinct) on its ownmerit. Yes, I understand that.

Ron MacKinley(L): Yeah, and that’s why I justmade that resolution that everybody got all excitedabout. It’s in order to prepare us for the (Indistinct). If we go in, Mr. Chairman, to the minister with thisdraft. He’s not going to have a decision one way orthe other and the minister doesn’t make thedecision, the committee makes the decision.

Leza-Matheson-Wolters: You make arecommendation to the minister.

Ron MacKinley(L): No, we make it actually to theHouse. And then the House then–the committeethen goes to cabinet and they decide how it works.

Wilbur MacDonald(PC)Chair: I think yourcommittee is looking though for a little more thanour recommendation. You are looking for what theminister’s is going to say to your recommendationsand our recommendation to the minister.

Leza-Matheson-Wolters: That’s correct, Mr.Chairman.

Wilbur MacDonald(PC)Chair: So I’m going tosuggest that we attempt, with the approval of thecommittee, to meet with the minister and yourgroup behind closed doors on Thursday, March 4th

at what time, at this point of time we can’t be sure,but we will attempt to do that. We do have theminister coming at 10:00 o’clock. If we may indeedmake that the behind closed door session.

Richard Brown(L): Mr. Chairman, just onecomment.

Wilbur MacDonald (PC) (Chair): Sure.

Richard Brown (L): The report’s been tabledtoday.

Wilbur MacDonald(PC)Chair: Right.

Richard Brown(L): We have the representativefrom the department, deliver this report to theminister tomorrow morning and we expect hisresponse next--on the next meeting.

Wilbur MacDonald(PC)Chair: Fred.

Fred McCardle(PC): I believe right after the newyear the potato industry had a request for adiversion. They went right to cabinet, they met withcabinet. That’s who you should be talking to.There’s no point in--we can’t make moneydecisions here. But that’s what the potato industrydid, why don’t you do the same?

Unidentified Member: They got more clout.

Fred McCardle(PC): I don’t think so.

Ron MacKinley(L): Anyway, the question is then,Mr. Chairman, I have--the committee will decidewhether we can get a meeting earlier or not. If it isthe decision of the committee that they don’t wantto meet until after the meeting with the minister--that’s a decision to be made here. The motion ison the floor and I asked for an earlier meeting sowe have agreed then, if I understand it right, thatwe will meet with the minister and with thembehind closed doors, sometime on the 4th.

Now ...

Wilbur MacDonald(PC)Chair: If that’s (Indistinct).

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Ron MacKinley(L): Now, just to clear the deckhere. Have we got an agreement that we meetearlier than that to discuss this among ourselveson what our recommendation will be when wemeet with the minister or does the committee notwant to do that. That’s up to the committee. I justput a motion on the floor.

Richard Brown(L): Mr. Chairman, therecommendation from the group ishere. Have itforwarded to the minister today or tomorrow, okay?His department has five days to put a packagetogether. I, as a committee chairman, and the restof you can decide. I want to see the minister nextweek hear say, okay, we know there is a crisis orthere isn’t a crisis. First of all, he can answer thatquestion for me from his perspective or–then shortterm solution number one, do you agree minister,yes or no? Number two, do you agree minister,yes or no? Or what do you see the problems orwhat are you willing to put on the table here?Long term, maybe we can say, look for the longterm, you can leave that for the next meeting, butshort term wise, minister what do you want? Idon’t want him coming in next week saying, oh weare still studying it.

Wilbur MacDonald(PC)Chair: Wayne.

Wayne Collins (PC): May I ask, Mr. Chairman,what is the minister right now being asked topresent to us next meeting, the 4th of March? Heis going to be appearing before this committee Ipresume it’s in relation to another aspects of someof the work that this committee’s been involved in.

Wilbur MacDonald(PC)Chair: It’s the hogindustry.

Wayne Collins (PC): Is it strictly the hogs? Okaywell, I agree with Richard then. This is there today,he’s going to be receiving a copy of this today.He’ll have an opportunity to look it over anddiscuss it with his department people and surely itis something that he’ll be prepared to commentupon and give his reaction to this, to thiscommittee at the morning session and based uponwhat he says or doesn’t say. I’m sure that that’ssomething that we may want to discuss later in ourmeeting on Monday, or later in the day.

That seems pretty straight forward.

Ron MacKinley(L): Now can you deal with the

fact, do I get a earlier meeting for this or not?

Wilbur MacDonald(PC)Chair: Well do you wantone?

Ron MacKinley(L): Yes I want one.

Wilbur MacDonald(PC)Chair: You want to meetat 8:00 o’clock on Thursday morning?

Ron MacKinley(L): No, not for this, I’d like to haveit on a separate day. I think there is a lot on ouragenda on Thursday. I would like to have it on aTuesday or a Monday or a Wednesday. So wediscuss here exactly what our position or some ofour feelings is on this. Now if the committee wantsto do that, fine; if you don’t , well that’s fine too.It’s, the chairman can take care of it, and we got toask some questions.

Wayne Collins (PC): Mr. Chairman, I would thinkthat the committee would discuss this all itspresentations when it’s formulating its report.Right? I don’t know if we just sit here and discussjust one presentation. I don’t understand, are yousaying it’s a closed meeting, an open meeting. Ibeg you pardon.

Ron MacKinley(L): Monday, Tuesday,Wednesday, Thursday, no, Monday, Tuesday orWednesday and the motion was to look at thisamong the committee, open to the general publicwhoever wants to come, to come and let’s find outwhat our agreements are on this. I give youenough time next week, you should by that timeknow enough about the hog industry, what you areprepared to do as a member of the LegislativeAssembly, not a member of Cabinet, not amember of government, but what you areprepared to do as a member of LegislativeAssembly, to recommend to the LegislativeAssembly for cabinet. If you don’t have enoughtime to do that in that time well that’s somethingyou got to decide here. That’s all I’m asking for isa public meeting.

Wayne Collins (PC): That sounds very much likeit’s bordering on committee deliberation. . .

Ron MacKinley(L): No it’s not.

Wayne Collins (PC): . . . for its report.

Ron MacKinley (L): No, it’s not.

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Wilbur MacDonald(PC)Chair: I think what we willdo is we’ll finish with our committee and discuss .. . Any more questions for the committee?

You certainly brought forward–go ahead Ron.

Tape No. 11

Ron MacKinley(L): Under this proposal--youknow $20 for a hog sounds to some people like alot of money but this has been going on since1998, I heard today and the price has been low.It’s not very much money when you break it over anumber of years. It’s probably a lot of money ifyou look at one quick shot. But this industry hasbeen hurt over a number of years. Am I correct ornot?

Leza Matheson-Wolters: That’s correct, over thelast six years, I don’t know if you have seen thedocument yet, it is produced by the government ofthe day and it’s referred to in this presentation andI know there was a lot of debate over when youcould meet and what you could say as a response.But I’m a little bit discouraged that there is not a lotof question or debate over our figures or ourrationale. Maybe it was that clear in thepresentation that we don’t need to do that. But ifyou can afford me a minute, I would show you thePrince Edward Island Hog Industry Analysis 2004which was just produced by the Department ofAgriculture, Fisheries, Aquaculture and Forestry inyour province. You might want to obtain thisdocument prior to your discussion of yourcommittee to back up some of the figures and therationale that are contained in this document.

Over the last six year average, our price has been,our average price has been $143. If we’re sayingthat our break-even price is $1.60, you have a 17cent differential loss between those two figures. Ifyou times that by your 85 dressed weight carcassand for not knowing that, that’s when they actuallyslaughter it and gut it out and it’s ready to go forpackaging and then you take that and you multiplyit, then you get where we’re coming up with the$15 loss on average over the last six years.

That’s where we then come up with looking at a$20 injection. If you take $15 that you’ve lost andyou’ve had bridge loans of prime plus one andyou’ve depleted your equity and increased yourliabilities, like the plight here today that you allagreed with and seem to have a lot of questions

for at that point of how bad is the industry. That’show bad it is. If you have six years of deficit at anaverage of $15 per hog and we’re asking for a littleover $3 million injection at 205 average marketedhogs per year in this last six years.

That’s not a lot of money, with all due respect Mr.McCardle, when you’ve put $20 million intopreferred shares and waver of other industries inthis province. If you look at it, $160 million spinoffsinto our Island economy, I think $3 million is a lotof money, especially to hog farmers who are so indebt, but it’s not a lot of money in the scheme ofthings. Last year alone, we had 27 and a half,$27.4 million in farm cash receipts in the hogindustry alone, all of this which will be wrapped upby your own provincial documents here today. Iwish you had a look at it before you got here.

You take that and you look at our 7 to 1 ratio,we’re putting millions of dollars in GPM alone. Ifyou don’t have a cash infusion into the industryand you loose 100 jobs at 40 grand a job and youlook at the astronomical amount of dollars addedplus the farm cash receipts, I ask you how youcan’t afford not to do it, Mr. McCardle.

Fred McCardle(PC): Well I didn’t for a secondsuggest that you don’t deserve the money. I meanI’d love to say here’s eight million. But I’m tellingyou, if you think you’re going to get response bynext Thursday that you’re going to get $4 million,then that’s not going to happen. I’d love to saysure, come on in, fill her up, but that’s not reality.

Leza Matheson-Wolters: If you’re implying fillingup, that would be like filling up your pockets like ahand out sir. With all due respect, that’s not whatwe’re asking for.(Applause)

Wilbur MacDonald(PC)(Chair): Wayne.

Wayne Collins(PC): Mr. Chairman, one questionhere, but we’ve all done the quick arithmetic,200,000 times 20 is 4 million. But have you had anopportunity or do you know what the bottom linepackage would be under short term solutions?

Leza Matheson-Wolters: The total, I think it was--we discussed that, close to $8 million.

Wayne Collins(PC): Close to 8 million. That’s withall the deferrals and the loan triggering and

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changes. About 8 million.

Leza Matheson-Wolters: Yes. The main two thatwe’re focusing on is the bottom line is we need adirect cash infusion. The other thing that’s ofparticular is, if you look at the thresholds, the buyouts, if you turn to page--am I taking too muchtime?

Wilbur MacDonald(PC)(Chair): No, go ahead.

Leza Matheson-Wolters: If you look at page 4,when we say a repayment threshold of $1.90.What we’re saying there is that we would not bepaying back any monies until it hit that rate and theloan trigger would be $1.60. Right now it’s at$1.40, between the $1.40 and the $1.60 mark, asreferred to by Mr. Fitzpatrick, I believe maybealready today. It’s just going to surface the debt ofthe bridge loan. When you look at the averageprice of 1.43, if you go from 1.40 to 1.60 okay, anymonies that you make may seem like cash flowlike you’re making money, but it’s going to servicethe debt of the bridge loan. And at prime plus one,you would be better off not letting it get above$1.40 so you didn’t have to pay anything and nothaving to pay back the bridge loan. Like it justdoesn’t make sense.

In Mr. Sobey’s report, it says the government canborrow money and it was researched at 2.5, 2.8per cent. So I beg to you today, why thegovernment is making off interest rates on thebacks of the hog farmers who we know--we look atother industries that were paid millions of dollars tospread their product over land to buy back andspread it over, and yes it’s a short term, but that’sall the time we have. We don’t have anymore. Ifwe could sir, I would give you a month and say,look--ut that’s basically where we’re at.

Wayne Collins(PC): Well I look forward to--oncethe minister has this copy in his hands and has hispeople working on it, I look forward to hearing hisreaction to this $8 million requested package, whatwe’re looking at.

Wilbur MacDonald(PC)(Chair): Anymorequestions?

Ron MacKinley(L): I have.

Wilbur MacDonald(PC)(Chair): Ron.

Ron MacKinley(L): Yeah, Ms. Wolters, $15 iswhat you said in your release here at thebeginning, that every hog farmer has lost a singlehog for six years. So if you multiply that, that’s $90.

Unidentified Voice: On average, I know it’s onaverage. When you go over and look for yourshort term solutions and you see you’re onlyasking $20 per hog. . .

Leza Matheson-Wolters: For one year.

Ron MacKinley(L): For one year, I know that. It’sone year. It seems very realistic. When I looked atthis and I read your brief, it looks like this is just abare minimum short term solution that is going tokeep you in business, just keep you going to payyour bills without being sold out. And that’s why Iwanted that thing to be discussed as soon aspossible time we possibly could. There is nothingelaborate here if you go down through it. Like it’sbeen told to us time after time again by your hogproducers that your cost of production is around$1.60 to $1.64. Change loan trigger to $1.60. It’svery well done out, the brief.

It’s great, we can meet with the minister andeverything, but as I said to the Chairman before,i t ’s our committee that makes therecommendations and then the minister could takethat to Cabinet. Where it’s not really what theminister’s recommendation is going to come in.You’re sort of like, when I’m sitting here alright, it’salright to say we possibly look into this. Now we’regoing to have the minister come in and tell us whathe’s going to do and what he’s not going to do.Well as Fred said, maybe you should have went tohim first. We have, as members of the LegislativeAssembly that should be able to makerecommendations to the minister which brings it toCabinet and then we decide where to go. So that’sjust. . .

Wilbur MacDonald(PC)(Chair): Jim.

Jim Doyle: Wayne mentioned earlier today that hewas out, I think it was about 21 years ago to visitthe Quality Swine Unit. That’s right and he was upat our place that day and we did an interview forCBC. I know, Wayne, that you haven’t beenprobably into the hog barns too much lately, butwhen you were talking to Leza here a few minutesago you were talking in terms of $1.60 loan triggerand $1.90. Well that day that you were out, we

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were getting $2.10 a kg and that’s, I think 21 yearsago.

Wayne Collins(PC): Twenty one years ago.

Jim Doyle: Yeah. So I just wanted to kind of putthat in a little bit of perspective. The other side ofit is. . .

Wayne Collins (PC): (Indistinct)

Jim Doyle: Yeah, that’s dating us though, youdon’t want to get into that. But the other side of ittoo, and a point, I’ve talked to a couple ofprovincial economists here and they use roughfigures about how much the hog industry is worthto the provincial economy. One figure that iscommonly thrown out is that we’re worth around$250 indirectly in spinoffs and jobs and what haveyou. The percentage that they take, or they feel isreasonable that comes into the provincial economyevery year from that $250, every year is about, isaround 10 per cent.

So in other words, the whole hog industry and thespinoffs to the provincial economy is around $25million. Now granted, you’re not going to loose thewhole hog industry tomorrow. You got to berealistic. There is no way you’re going to do it.We’re going to loose a percentage even we gowith this package, you got to realize that. We’vegot, as I understand it, seven guys right now,seven large producers before Farm Debt Review.So those guys if they’re not gone, they’re going tohave to change their operation. Okay, but the pointis, I think we can save the plant if there issomething very quickly done. If we sit around formuch longer, two or three more weeks, it’s goingto be too late. I’m not saying this callously oranything. I really believe that’s the case.

If we loose the 30 per cent which is around 3000sows, if we loose 30 per cent of our producers,we’ve lost our plan. All you have to do is look backone year ago as to when the Hub Plant in Monctonshut down the beef line. I’ll tell you, it didn’t taketoo long for beef producers to get on the road tobuild their own plant here. Because I’m a beefproducer too, and it cost me about $85 a head forevery head I send to Toronto to get killed. It’s justnot feasible. There is no way that if we loose ourplant, you’re going to loose the whole industry ifthe plant goes. I guess our argument, or at leastmy argument is, I don’t know if the province can

afford to loose the $25 million in income that Ithink, and your own economists say, come into theeconomy.

Unidentified Voice: (Indistinct)

Wilbur MacDonald(PC)(Chair): Can we hear fromthe next person.

Walter Clark: I want to make a comment there onRon’s statement there that $90 that was lost perhog over the six years, that we’re requesting 20.Well that difference is $70. That’s our equity.That’s what our equity was. With the 20 buckswe’re looking for Fred, I’ll address this to you.That’s our arrears. And you’ve been hearing it allafternoon here. That everybody is--that we’re all inarrears with everybody. So that’s what we’relooking for, Fred.

Fred McCardle(PC): I don’t disagree with you.

Wilbur MacDonald(PC)(Chair): Ron.

Ron MacKinley(L): Now, if I can just have aquestion of Ms. Matheson-Wolters, whatever. Yousaid $8 million package, now I can see the $4million size, but how do you get the rest of this toadd up to $8 million, or 4 more million. Like if youlook at, we asked for the provincial government tosupport hog producers in their request to thefederal government to have financial institutionsdefer loan payments until such time as prices go to$1.50. That’s not going to cost the provinceanything, you’re recommendation number five.Fourthly, we request that our government endorsea letter of credit from a financial institution directdeposits, well, that’s a program that Ontario andSaskatchewan were holding out which maybe itwill come and maybe not. That’s not going to costthe province anything.

Now, just how to get this extra 4 million. Like Idon’t see....like this here threshold, changerepayment threshold to $1.90. Someday the hogindustry is going to go up. The government isgoing to get their money back. Basically whatwe’re looking at here is a repayment of principalonly. That means you don’t have to pay theinterest. It doesn’t say you’re writing the interestoff there or not. It says repayment of principal only.Proposed changes to be retroactive September 1st

with exception of changes. So if you could just tellme how you get it? I could see maybe five, I can’t

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see eight. Where does that come from?

Leza Matheson-Wolters: Well I think when wediscussed it, we looked at all the short term and allthe long term. We tried--we had a much morelucrative deal than this when we started and webare boned it. I mean that’s the reality.

Ron MacKinley(L): So what you’re saying, excuseme for interrupting, but just to be correct. Whatyou’re saying is, your short term solution and yourlong term solution could cost up to 8 million.

Leza Matheson-Wolters: I think what I wasproposed to Mr. MacKinley, is you’re right, that’sprobably not that high for, we’re more concernedwith the first two and that’s why we’re set asnumber one and number two. Probably numbertwo should have been number one and numberone should have been two, but it’s a hardbalancing act to look at. But I would suggest that inthe Government of the Day and the Oppositionlook at those two figures. You have your owneconomists, you have your department people thatdevelop really comprehensive, I give you credit,good reports. I used your report to write this.

So take it back to your people in the next couple ofdays and ask them how much they think it’s goingto cost you. Right now I can tell you, that in the lastyear, the marketed hogs per week was 2003 fromyour report was...per week was 4135.6. That is atotal for 2003, 214,999. I could quickly do the mathfor you on that. If you were to times that by $20,that I do have an accurate figure on, based onyour government report.

As far as the loan, yeah you probably have to lookand see how...what loans are outstanding, howmany there are, what does this mean, what theprojection is. I look at the George Morris projectionthat things are going to get better. So yes, it’sprobably going to go up. We’re not asking for youto write our loans off like you have for others.We’re saying, we’ll own the debt and we’ll pay itback.

Ron MacKinley(L): So you’re asking for roughly$4 million up front on a $90. . .

Leza Matheson-Wolters: Seventy dollars.

Ron MacKinley(L): Yeah, loss, but $4 million upfront. Which everybody came before and said, they

need cash, they need cash now, period. Even thebank said that. When you look at the other parts,the cost isn’t all that high when you look at theother--I’m talking about the short term solution.That’s why I made that resolution to look at itbecause it’s short term. If the committee decides tomeet earlier than it’s up to the committee. But if thecommittee decides to meet earlier than nextThursday, I know we can’t get that on the agendabecause we got too much to do. But we got aMonday, Tuesday and a Wednesday...

Wilbur MacDonald(PC)(Chair): John Earl has aquestion. John.

John Earl: I know what you’re saying, I’m nottrying to shoot the messenger, but to tell us, it’s nota chance, if there is a political will you can do it.There’s a lot of people that sit on the ConservativeCaucus around here. And you say it’s not reality.Give your head a shake. I understand that. But I’lltell you what reality is. It’s my mortgage paymentnext month and my feed payments. That’s what itis.

Leza Matheson-Wolters: We’ve been shaking ourheads.

Fred McCardle(PC): It’s not that you don’tdeserve $4 million, it’s that you’re not going to getan answer on it next Thursday. That’s what I wastrying to say.

John Earl: Why can’t we? It’s an answer. Whycan’t we, Fred?

Wilbur MacDonald(PC)(Chair): Let’s see what wecan do. That’s all we can say.

Leza Matheson-Wolters: Much more lucrativedealings have been made in much smalleramounts of time.

John Earl: You guys all sit in caucus. Why can’twe, it’s serious. It’s the immediacy.

Fred McCardle(PC): The Cabinet is where thedecisions are made.

John Earl: Call the Cabinet together. You agreewith this. I don’t think you understand howimportant it is. If I could wait till June, I would andI’d say thanks, let’s go through all the procedures.I can’t wait.

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Wilbur MacDonald(PC)(Chair): I think werecognize the importance of it and the real needright away, so I would suggest if it’s okay with you,that we now go into camera so we can...

Ron MacKinley(L): Why do you want to go intocamera?

Leza Matheson-Wolters: That’s fine with us.

Wilbur MacDonald(PC)(Chair): I’m sure it is. Andwe’ll do everything in our power to have somethingon the fourth. Okay with the minister...

Leza Matheson-Wolters: If I could have from youas the Chairperson, I will provide with you myname and number and if I could have a responseso we know.

Wilbur MacDonald(PC)(Chair): Yeah, with theClerk. We arrange everything through her, okay.That’s the way we do it.

Leza Matheson-Wolters: This is for MinisterMacAdam.

Richard Brown(L): Okay, Wayne, you deliver thattomorrow.

Wilbur MacDonald (PC) (Chair): We’ll give thatto Wayne.

Ron MacKinley(L): Mr. Chairman, I mean it’s notthe presenter’s decision to go into camera. I thinkeverything we should do is debate it openly here.Like we talked about in camera. Whether we meetor we don’t meet should be talked openly. If theywant to stay, it’s fine. If they don’t want to stay,that’s fine, too. But all of a sudden when things geta little dicey, Mr. Chairman, you like to go inbehind closed doors. There’s been too much stuffgoing behind closed doors.

Wilbur MacDonald(PC)(Chair): It’s not an issuewhether we go in behind closed doors.

Ron MacKinley(L): Well why are you saying goin....

Wilbur MacDonald(PC)(Chair): It’s quarterpassed six, people have things to do. I’msuggesting that if you don’t mind, we’ll just call ourmeeting now and we’ll talk about when the next

meeting--we have to go through some things totalk about when the next meeting is going to beheld, how we’re going to do it and so on. Okay, wethank you very much.

(Applause)

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