The Nova Scotia Legislature

The House adjourned:
October 26, 2017.

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

ECONOMIC DEVELOPMENT

Tuesday, November 9, 2004

COMMITTEE ROOM 1

Nova Scotia Federation of Agriculture

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Mr. Russell MacKinnon (Chairman)

Mr. Brooke Taylor

Mr. William Dooks

Mr. Mark Parent

Mr. Howard Epstein

Mr. Charles Parker

Mr. David Wilson (Sackville-Cobequid)

Mr. Wayne Gaudet

Mr. Harold Theriault

[Mr. William Dooks was replaced by Mr. John Chataway.]

[Mr. David Wilson (Sackville-Cobequid) was replaced by Mr. John MacDonell.]

[Mr. Wayne Gaudet was replaced by Mr. Leo Glavine.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Nova Scotia Federation of Agriculture

Mr. Laurence Nason

Chief Executive Officer

Mr. Kurt Sherman

Executive Member

[Page 1]

HALIFAX, TUESDAY, NOVEMBER 9, 2004

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Mr. Russell MacKinnon

MR. CHAIRMAN: Good morning, ladies and gentlemen. Welcome to today's meeting of the Economic Development Committee. Today we have with us Mr. Laurence Nason, CEO of the Nova Scotia Federation of Agriculture, and Mr. Kurt Sherman, an executive member, as well. Mr. Nason and Mr. Sherman are here to speak on agricultural issues in the Province of Nova Scotia. The format is, generally, we'll open up with the 15-minute presentation, more or less, and then we'll open up the floor to questions. Mr. Nason, obviously, is no stranger to the committee, and is a very active, prominent figure in the agricultural community.

Before we start, I'll ask individual members, starting on my left, to introduce themselves.

[The committee members introduced themselves.]

MR. CHAIRMAN: Mr. Nason, the floor is yours.

MR. LAURENCE NASON: I guess I'll start by saying that two weeks ago at an event in Truro - I think you were there, Mr. Chairman - a former Minister of Agriculture said that I could be a pain in the butt. My response to that was that that's in my job description, so I'm here today to do my job. I think I'm going to skip some of the preliminaries and will provide you with a copy of a written brief. I think you know what the Federation is and what we do. Basically we represent about 2,200 farm businesses in Nova Scotia, and those 2,200 farm businesses account for well over 95 per cent of the production.

1

[Page 2]

I want to start out with an idea that Yvonne Rideout, the Executive Director of Keystone Agriculture Producers, in Manitoba - the statement she made. Yvonne is the manager of the general farm organization in that province. She uses the metaphor "The Perfect Storm" with reference to what's taking place in rural Manitoba. She uses it to describe a kind of menacing mix of conditions that are converging on rural communities that threaten the future of farming here in Nova Scotia and across the country.

If you think about it for a minute, frightening livestock diseases like BSE and the avian flu, flawed public policy, uncontrollable decisions of other national governments, weather events beyond anyone's control - I guess the provincial government is responsible for the weather, are they not? - changing markets, failing markets, increasing energy costs, declining incomes, pressures of urban development, changing community values with respect to the environment, and certainly changing demands regarding food safety, with what has happened in the last number of years.

I think that's where the metaphor becomes a little less relevant for us here in Nova Scotia. I guess what I remember about the movie was that the crew and captain were all warned about the impending storm, but they decided to go to sea anyway, and even when they had a chance to escape, they still went on. I think I can say that farmers in Nova Scotia have no intention of going out to sea. They'll prepare themselves the best they can, to ride out the ravages of "the perfect storm", and they'll at least be prepared to meet the challenges that it presents before they venture in.

But farmers and their families here can't do that alone. In fact, the agricultural industry here in Nova Scotia has been in the storm surge now since about 1997, and that storm is extracting its toll from the industry. Between the last two censuses, 1996 and 2001, there were about 530 farm businesses in Nova Scotia that went out of business. I would suggest that when we see statistics from 2001 to the end of 2004, we will probably see a similar amount, if not more, of farm businesses that have left the industry. If farmers find it impossible to prepare for that storm themselves, they just simply stop what they're doing and go out of business. I guess, then, a more apt metaphor or image might be found in Van Gogh's Wheat Field with Crows, or even Picasso's Guernica, the screaming faces or tortured images in that painting.

One of the things you wanted to talk about this morning was Carriere Foods, the closure of Avon Foods in the Valley. The immediate and direct impact of that closure was the loss of about 80 processing jobs and 55 seasonal jobs, and the loss of market opportunity for approximately 45 primary producers. With respect to those primary producers, they were informed that they would no longer have a market for their product, about four to five weeks before they would have normally put seed in the ground.

[Page 3]

That decision to shut down Avon Foods affected approximately 3,000 acres of agricultural land in the Valley. The majority of the crops grown on this land were part of a three-year rotation and, consequently, the total acreage that was impacted was about 9,000 acres. I think it should be noted here that as much as half of this land could very easily move to non-renewable uses if suitable agricultural alternatives aren't found. Given that the most natural evolution for much of the land impacted is production for the fresh market, fresh vegetables, I think it should also be noted that there is not a whole lot of room within the current fresh market structures for additional production.

With respect to remedial measures, the long-term issue is the replacement of current crops with marketable alternatives; to ensure that the affected land remains in agricultural production, I think, is a priority, certainly with us, and certainly with the majority of the people who own that land. In the short term, the issue is to find suitable crops for the land that has been impacted, to protect existing infrastructure, and to ensure that farm businesses that have been impacted have enough income to survive until alternative uses can be identified and developed.

On March 26th, the Federation met with 40 producers who supplied the Avon plant with product, and the meeting requested us to open discussions with the province on a transition assistance program that would provide them with some flexibility in the 2004 crop year, yet enable them to make the transition to other more viable crops in the future. Again, you have to understand that that plant closed, and it was just four to five weeks prior to when they would have been putting in the crops, that they marketed there, in the ground.

Crop statistics. We use crop statistics to develop a recommendation to government, to provide immediate assistance for those farm businesses. The immediate loss due to the market for carrots, peas, beans, potatoes, apples and green tomatoes was calculated at about $1.5 million. Government was asked to make a commitment to assist with this lost income. It was noted at the time that crop estimates should be verified by looking at Nova Scotia's levies and crop insurance records, however, that verification wasn't necessary because basically what the government told the impacted producers was that the CAIS Program would be there for them. I want to talk more about CAIS under the heading of Flawed Public

Policy, in a minute.

[9:15 a.m.]

So in recognition that 3,000 acres must remain in production until viable alternative crops could be developed, producers asked government to establish a green manure fallow program that would provide those 40 to 45 producers with the cash flow to get an alternative crop in the ground so the land wouldn't lay fallow. The request that was made for $100 per acre, the cost of that program would have been about $250,000, based on the records that we had. Again, the government turned a deaf ear.

[Page 4]

I think the other factor that we asked government to consider was a program that would enable the owners of some very specialized infrastructure, harvest, planting, and storage equipment to maintain that infrastructure until alternate crops and uses could be developed, so that infrastructure would still be in place. So what happened was the Nova Scotia Department of Agriculture and Fisheries has established a working group with industry representatives to begin to look at alternative crops and marketing initiatives to replace the existing regime.

The group, I think, has met three times. It's examining a study that was done by Horticulture Nova Scotia and the Nova Scotia Fruit Growers presently, and I believe they've developed the terms of reference for another study. The department also established a mechanism to communicate with the affected producers and provide them with information on alternative crops as the options were identified and, of course, they sent them CAIS applications as well.

The CAIS program. The program, that was supposed to replace existing safety nets, was introduced as part of the agricultural policy framework and it was basically to provide farm businesses with income stabilization and protection against disasters such as the closure of Avon Foods, BSE, market failures, and certainly, uncontrollable weather events. It was the program that the government said would eliminate ad hoc funding. Well, take a look at what has happened here.

In the past 18 months we've seen at least half a dozen ad hoc programs implemented: BSE recovery; transitional industry support; bridge funding, and the list goes on. It's the program that almost, without exception, every farm organization in the Dominion of Canada pleaded with the provincial and federal government not to implement - at least not to implement the program until somebody could explain it to farmers, explain how it works, and we still haven't gotten an adequate explanation of how it works.

This is a program that the Government of Nova Scotia told the ruminant livestock industry, and the pea and bean producers that they would have to rely on this flawed program. CAIS is there for you when you have problems like this, we have heard that a number of times. I can tell you - and I think most farmers in the province will tell you - that it is certainly no panacea for the problems that the industry faces.

In a release by the Department of Agriculture and Fisheries on October 18th, that release provides us with a bit of insight into just how successful this program really has been. On Page 3 of that release, the department officials report that as of October 3rd, 1,138 farm businesses had joined the CAIS program in 2003. They also report that 211 applications have been processed and 121 payments have been made - that's only a year later. Only 11 per cent of last year's applicants have received payments a year later, some of those are interim payments and some of those will have to be paid back, in fact, because they were advanced.

[Page 5]

Some of you may remember a year ago a government task force on BSE recommended that cattle producers in this province required $400 to stay in business and to replace the equity they had lost in their herds. Some of you remember the government's response to that task force.

The government came up with what they called the Nova Scotia Beef Producer Enrolment Program; that program provided producers with a payment of $100 per cow. However, there was a catch. The catch was that to qualify for the $100, producers had to join the government's CAIS program. Producers were basically told they would receive the other $300 in emergency assistance from the CAIS program. That $300 from CAIS seems to become the exception, not the rule. There were 723 producers who joined the program, of that 1,138 - 723 of them were actually beef producers - we're not aware of any producer in the province who received $300, we're aware of producers who received $5.50 per cow and $15 per cow and so on. Remember again, one year later, only 121 producers out of the total number of people who joined that program have received any payment at all from that program.

It needs to be pointed out here - and Kurt can certainly answer questions with respect to this - that there are some costs associated with making application to that program. We have discovered that the average accounting bill for the development of a CAIS application is approximately $700 and then there is a premium required to access the program. If a producer wishes to protect a $50,000 margin, that producer will be required to put on deposit as much as $12,000 in a CAIS account. So it is not much wonder that across the province now the Nova Scotia Beef Producer Enrolment Program is often referred to as the CAIS extortion program. Producers were forced to get into a program that is flawed.

As already noted, farm businesses were impacted with the closure of Avon Foods and they were told this program is there for you. The problem is a bit different now, the CAIS program considers any variation by commodity greater than 5 per cent on a farm as a structural change, well guess what? If you were growing peas and beans last year and you have no market for them this year and you don't plant any, you plant barley, that's a structural change that is 100 per cent. So what they do is go back and use some arithmetic to change your margins and so in its current form, the CAIS program is of no use to those producers who planted different crops. However, there is the opportunity for the program to be amended through a federal-provincial agreement to cover that kind of situation.

The government has made a commitment to pursue the necessary change, however, we're not aware that the program change has been made, and even if it has, the program certainly cannot deliver assistance quickly enough to be of any real assistance to these producers. I have to tell you, if it weren't so tragic it would be comical, the way this program works.

[Page 6]

Some of you may have noticed an article in the Economist on October 30th called Complexity - Keep it simple. It reads:

"'Life is really simple' said Confucius, 'but we insist on making it complicated.' The Economist agrees. Unfortunately, Confucius could not have guessed what lay ahead. The rate at which mankind makes life complicated seems ever to accelerate. This is a bad thing. So this newspaper wants [to] be the first to lay down some new rules. Henceforth, genius will be measured not by how fancy, big or powerful somebody makes something, but how simple."

Well, if you apply the Economist's new rules to the federal and provincial bureaucrats who designed this program, none of them are going to be singled our for their genius, I can tell you that. Ask any farmer who has attempted to use the program. Kurt can tell you that the weight of the application paperwork that is associated with the program is comparable to War and Peace.

To get an idea of how complex and really foolish this program can become, I'm going to leave you with a copy of an article by Greg Webster that was published in our November newsletter. That article is called "CAIS a road to the future or an alleyway of provocation."

One thing you need to remember here when you look at Webster's article is that Webster Farms probably has the best set of financial records of any farm business in this province. Here is a farm with impeccable financial records that cannot get through this program because of its complexity. They are a mixed farm, and that makes it even more complex to get through, and it also lessens the chance that you'll get any payment.

The program is basically designed for western Canadian grain farmers and central Canadian grain and oil seeds farmers and it doesn't work in farms that are structured in the way that we've structured our farms here.

The program isn't right. In its present form, it doesn't help farmers with either income stabilization or disaster. Webster really has the last word in his article, and he concludes his article with, "The only risk being managed here is the risk of government having to put money in the agricultural community."

Mr. Chairman, I could go on and talk about some of the other elements of this storm, if you like. There are a number. BSE, we can talk about that crisis, day by day, from May 21, 2003, when the U.S. border closed to Canadian cattle, to November 9, 2004, today. The livestock industry in Nova Scotia has lost millions of dollars. Calves, at the feeder sale on Saturday, there were 1,600 cattle. The average was 67 cents, which is actually 3 cents to 4 cents lower than the average at the previous sale. Do you know what happened? They closed

[Page 7]

the P.E.I. bridge, and some of the buyers from P.E.I. couldn't get across with their trucks. Consequently, the price dropped by 4 cents.

The average prices were lower. Farmers have, as well, lost millions of dollars in equity. The border has been closed for 18 months now, and even if it opens tomorrow, that's still not going to solve our problem. Yesterday, Patrick Boyle, the CEO of the American Meat Institute put it fairly aptly, said "Once the toothpaste leaves the tube, as the saying goes, there's no amount of wishful thinking or heavy-handed coercion that's going to force it back in . . ." I think that's a situation we have to deal with here in Nova Scotia. Livestock markets have changed, and they're never going to be the same. We always tend to approach these crises by wanting to get back to the status quo, by wanting to put things back together the way they were, and that isn't possible.

Last October, in fact, as part of a strategy we presented to the government, we suggested at that time that the department put together an industry/government group who could examine how Nova Scotia can fit into this post-BSE that we could see emerging even last October. Eight months after, we got a letter from the government that basically said, good idea, go ahead, we'll watch with interest. Then at the rally that we had on October 19th, a few weeks ago, the minister did say that he would move ahead with that. Here we are, a year down the road, entering a brand-new world with a blindfold on, when we could be well on our way to solving this situation on our own.

I just want to make a few points. You don't have to set up a task force to think about some of the opportunities that this crisis has actually provided us. We have a relatively small and agile cattle industry here in Nova Scotia. We can change directions very quickly, if we could figure out which direction we need to go. We have a highly skilled bunch of livestock breeders. We ship purebred livestock all over the world, out of this province. We can grow grass as well as any place in North America, and we know how to feed it, and grass beef is going to be a premium in the future, because it doesn't have all of that stuff in it that these guys on feedlots are feeding these cattle. We're comparatively isolated. We can contain problems quickly and easily. Everything in or out has to come across the Isthmus of Chignecto.

We're sitting on top of the best market in the world, the northeastern U.S., we're the closest place in North America to the next-best market in the world, western Europe. Because of the makeup of our cow herd here, we probably have fewer cows that were born prior to 1996 than any other place in this country. And what are we doing here? We've sat around for a year.

I know the obvious question here is, and someone's going to ask it, why haven't the Federation and the livestock groups started to go through this planning process on their own? I can tell you we have, but we realize that because of the complexity and the size of the issues we face, we can't forge ahead by ourselves. There's going to have to be some

[Page 8]

structural changes made to the industry. There will be policy issues that have to be dealt with, and we can't do that alone. We need a commitment from government to be successful in this planning process.

[9:30 a.m.]

I can tell you that the minister said he was going to publish a list of farmers and the help and assistance they've received. There's been some money put into this issue, but the money isn't as important as the planning process that we need to get into now. I think that most farmers in this province will tell you that the dollars that have been invested in the industry in the past 18 months haven't done a thing to impact the profitability of farms in this province and won't. That's why we need to get into a serious planning process. It doesn't only apply to the BSE situation, it applies to the whole industry.

MR. CHAIRMAN: Thank you very kindly. We'll open up the floor to questions. Our first question is from Mr. Parent.

MR. MARK PARENT: Thank you for your presentation, Laurence, and for the work the Federation does. There are two things I wanted to talk about. The CAIS program, as you say, I continue to get complaints, as you get, about its complexity, its inability to respond to situations and the slowness in which people get response. I heard similar complaints about the NISA program when it was in place. Now, I guess in retrospect, the NISA program looks better than the CAIS program.

The question I have is - I don't know exactly how to phrase this, but the reason why the province participates in these federal programs is to leverage federal dollars, and it's almost sort of Catch-22 situations for provinces like ours. I agree with you that most of these programs seem to benefit farmers who are not mixed-commodity, not small farmers like we have, but what is the answer to that? If you don't participate in the program, then you don't leverage those federal dollars. Should we go it alone with our own programs and just say to heck with you? That means, in a sense, we're turning our back on 50-cent, 60-cent dollars. You know the issue far better than I do, but I'm just wondering what thoughts you had about that.

MR. NASON: First of all, you can't compare CAIS and NISA. NISA was an income stabilization program, and we had a program called CFIP, which was a disaster program, which, by the way, I would point out that part of the money that the minister says he's provided the industry is the 2002 CFIP payments. It's 2004, almost at the end of 2004. What CAIS has done - and again I would suggest that you read this article that Greg Webster has written because he explains it very well - is combine those two programs. That just complicates it further.

[Page 9]

With respect to levering federal dollars, yes, I think there's merit in that, but maybe we just have to be a little smarter in how we lever them. I would refer you to the appendices of the APF agreement. If you look at those appendices, you'll see that one of the goals the Province of Nova Scotia may have had here in levering those federal dollars was to replace provincial expenditures. The province has replaced, I think, in the current year about two-thirds of their Farm Investment Fund and a portion of the industry investment fund with federal transition dollars.

I think that you may be right, there may be some cases where we might be just as well to take the 40 per cent that the province would use to lever the 60 per cent, and try to develop something that's more relevant here. We're part of the APF process. There's a federal portion of that, what I call the bottom half, where the federal government is making investments with respect to the environment. There's a green cover program for planting trees.

I drove from Truro this morning and I didn't see too many places where we want to plant trees in this province, but we're in the program, so I think that needs to be examined and perhaps it's something that government should think about. Certainly something that the Federation has discussed in the past month is taking a look at how these programs have actually impacted the agricultural industry, what have they actually done.

As I suggested before and I think most farmers will tell you that the investment that is being made doesn't help the profitability of farms any. It's helping us climb out of the problems that we've gotten into because of these uncontrollable factors. I think that that's all part of a broader planning process that I think needs to be undertaken and it needs to be undertaken not only by government, but I think in conjunction with the industry.

One of the defining factors of the past four years in this industry is that there is basically no consultation process anymore. I talk to my counterparts from other provinces on a regular basis. Those industry organizations were involved in the APF discussion, we weren't. Those organizations and the farmers they represent are now receiving programs that we're still talking about or they're tied up in bureaucracy.

MR. PARENT: I appreciate that because there is this frustration with these federal programs but you're saying that really the blame is on both the feds and the province, and that we need to be doing some things differently and more proactively.

The preservation of farmland, you touched on, and I really don't have a question so much as a comment. I believe strongly in the preservation of farmland. I'm in a riding that is most affected by this and growing urbanization in Kings North, prime farmland in Nova Scotia. I guess I've come to see that putting the weight of the preservation of farmland totally on the farmers is not fair. This is not so much a question as a comment, I really think the province needs to look seriously at this issue and take it on as sort of a joint partnership.

[Page 10]

There are some wonderful programs out of Pennsylvania, for example. I'm just wondering what thoughts you had on that.

Right now the policies we have seem to put the weight on the farmers and I'm not sure that's fair. As a worthy goal, putting the weight only on the farmers seems to me to be an unfair burden, when really the preservation of farmland is something that is an issue that should be of importance to all Nova Scotians.

MR. NASON: I think that's addressed in the brief that we've left you. I don't know how many of you noticed this article in The Globe and Mail on October 30th, "Farmers out in the cold as development frozen". I always used to use the example of a friend of mine in Ontario years ago who went to bed one night worth $10 million and woke up the next morning worth $2 million because a planning committee, the local council's PAC had passed a bylaw to protect his land for agriculture. Everybody kind of said is that a real story but anyway, this guy, whose name is Harry Brander, his land was worth $250,000 an acre when he went to bed and $10,000 an acre when he woke up, simply because they had frozen development on it. That is what we're faced with in the Valley and I think farmers are having an increasingly difficult time figuring out how to fit in, how to maintain a way of life that they want to maintain because they enjoy it, but also because they are very good at it.

Farmers aren't stupid, they're smart people, they have families to protect and they have to do the prudent thing. As painful as it may be, I think that they're discovering that the prudent thing to do in many areas of this province is to manage their portfolio of assets with their heads and not their hearts and sell the bloody farm. You strip away all the nostalgia about the family farm and there are some realities there. Certainly, agriculture in this province primarily takes place in what I refer to as the triangle - Kentville, Halifax and Truro - and that's where people want to live. You watch what happens now that the highway is twinned as far as Windsor. That area will develop and you can't afford to farm land that is worth $25,000 or $30,000 for a 10,000 square foot lot. That's a huge problem and we expect to be discussing that at our annual meeting in December. We have a policy that is fairly comprehensive with respect to land use.

MR. CHAIRMAN: One minute.

MR. PARENT: I guess in the one minute I have my last comment is, we talked about the Avon Foods closure when we were there and the need to be proactive and look ahead as we saw canned foods becoming less and less appealing to consumers. At that stage I was feeling rather downcast and you talked about the opportunities and you've ended your talk with that, with many of the opportunities in agriculture and some of the bright spots. I simply want to make a plea, in the midst of all the problems we need to fix, not to lose sight of what you closed with, that there are some wonderful things going on already. We have some of the best farmers in North America and there are opportunities if we take advantage of them,

[Page 11]

and I appreciate you mentioning those. Sometimes we can get so fixated on the problems that we forget the opportunities.

MR. CHAIRMAN: Mr. Taylor.

MR. BROOKE TAYLOR: Thank you, Mr. Chairman, and Laurence, thanks for the presentation. Laurence is a very busy man, last night he attended . . .

MR. NASON: No busier than you, I'm just following you around.

MR. TAYLOR: I know Laurence was late getting home last night, he was up in Cumberland County, as was Kurt. One thing that came through loud and clear last night at that meeting was the point that was made here again today, that the CAIS program clearly isn't working and hasn't worked.

Laurence, those numbers again, the number of people who applied and those who actually received some compensation but not near $300 a head was out of how many, again?

MR. NASON: The information that I have, and it's from a release that the department made . . .

MR. TAYLOR: It was 1,138, was it?

MR. NASON: . . . yes, there were 1,138 applications and this was as of October 3rd and they've made 121 payments and processed 211 applications - a great record. I think Kurt might want to make some comments on the CAIS program because he's a mixed farmer in Cumberland County and it hasn't been a whole lot of good to him.

MR. CHAIRMAN: Mr. Sherman.

MR. KURT SHERMAN: I've got a diversified farm, I guess you would call it. I have some blueberries, some sheep and some beef cattle. I have three young kids who aren't big enough to really help me out around the place but they like to try. For 2003, I didn't qualify for a cent from the CAIS program.

Blueberries, as you are aware, are like a two-year crop and I picked three acres one year and 10 acres the next. Just the way they average the CAIS program, it's the previous years to come up with your margin. That was one of the problems that put me in the position I was in, I didn't get a cent. I still owe my accountant $740 for figuring it out. I had a pretty good idea where I stood but if I was going to come to a place like this and argue about it, I guess I thought I had to know exactly what was what. So I owe him $740 to do the paperwork up and in the end, I don't get a cent for 2003.

[Page 12]

I applied for the interim payment for 2004 and he said that he wouldn't like to bet $10 which way it went because that would be all I would get, if I got anything. I've applied for the CAIS special advance payment, which is $200-a-cow unit. I don't know when I'll get it, I applied two weeks ago, but if you read the fine print under that advanced program it says that at the end of the year when you file your final tax return, if your advance payment was over and above your final qualification, you have to pay the difference back.

At one of the meetings we went to in Antigonish, one of the department's staff explained that they would recover the overpayment from future payments. So I called the head office of CAIS to find out for sure what their take was on it and they told me that they would notify me of an overpayment and I would have 90 days to pay it back and then they would start charging me interest, comparable to whatever the federal bond rate was. They'd just keep piling the interest on it until I paid it back. Well, if I don't qualify for an interim payment, I probably won't qualify for much of a final payment. I know pretty well where my numbers are going to be by now. I don't know how I'll deal with that. I'll take the money right now and worry about it later I guess, because, really, I don't have any other option. We're 18 months into this, and we're farther behind now than we were a year ago. It's just not working.

[9:45 a.m.]

Another problem is the producer portion, we have to have a third of that in our account. They did have it set for - when was it? - the end of December, and they've rolled it back to the end of March now, I think.

MR. NASON: The program is like Chinese baseball. Have any of you ever played Chinese baseball? That's where you hit the ball and they can move the bases all around the field. You never know where first base is.

MR. SHERMAN: I'm supposed to have my one-third deposit in by the end of March, I think, isn't it? But I don't know where that will come from either.

MR. JOHN MACDONELL: How much is it?

MR. SHERMAN: About $1,800 is what they're looking for. When I signed up for what Laurence calls the extortion program, and a lot of the cattle producers have adopted that phrase, that didn't work quite right either. When we were on the task force, we went around and we came up with the number of cows that were in the province. When the papers came to fill out for your case enrolment, the description there, as far as I was concerned I had 48 cows, but when the paperwork was there to be filled out, a bred heifer that hadn't calved or a heifer under three years old didn't qualify, so I had 39 animals that fit the program. I don't know who came up with that idea.

[Page 13]

Anyway, I had $3,900, I have to put $1,800 in my account, because I'm hooked on the program now for taking the bait with the $3,900. The whole thing is a mess, I guess that's about all I can say. In the same length of time the costs of production, from fuel to electricity to even parts that have been affected by the increase in steel prices - they have gone up is the excuse they give me when I go pick up any parts - everything has gone up, and our cattle are bringing half, if we're lucky, of what they were a year ago.

MR. TAYLOR: I think Kurt's story is typical of hundreds of Nova Scotia farmers out there. I'm wondering, whereas this is an all-Party committee - and in fact Laurence was right, when he made his presentation he explained that the task force on BSE did make a recommendation that the farmers receive $400 per animal, and that was breeding stock. As well, in order to qualify, they had to enrol in the CAIS program. Whereas it hasn't delivered, in fact the farmers have been getting, with all respect, screwed by the program, I really think it would be incumbent on this committee, perhaps, Mr. Chairman, through you, to send a letter off to the federal Minister of Agriculture, and a copy, of course, to the provincial minister, regarding this program.

The adjustments and the amendments, we were told, or at least the farmers were told, the program can be adjusted to deal with the variations in the commodities, and that hasn't happened. I'm just wondering . . .

MR. CHAIRMAN: Perhaps since you only have one minute left - I'm trying to allot 10 minutes for each questioner - we can entertain that as a motion at the end of the deliberations, if that's okay.

MR. TAYLOR: Yes. I want to say something else, and I think it's very important. I may be the eternal optimist, and perhaps Laurence is right that even if the border did open, certainly it would be part of the solution, but I really believe you can't, as a government in this country, continue to call our American cousins bastards and morons and warmongers and things of that nature and expect to foster the good relations that are necessary to keep the trade going. It really is a political issue now, as far as the border goes. It's not the science, the science is in. We were told months ago, down in Washington, by the United States Department of Agriculture that there's no reason for the border to be closed. It's all politics now.

MR. CHAIRMAN: I'm sure the Prime Minister will be glad to hear your comments.

Mr. MacDonell.

MR. MACDONELL: Thank you, gentlemen, for your presentation. Where to begin? Maybe there's a possibility of tying the prescription drugs to the neck of every beef and send them across the border that way. It might be a way to get a little interest in Canadian cattle.

[Page 14]

Laurence, you mentioned there were policy issues to be dealt with, and I'm just wondering if you have kind of clarified in your own mind some of those issues and some changes you would like to see made.

MR. NASON: That's one of the reasons why we need to move ahead with trying to plan the industry. Mr. Parent made reference to one of the policy issues that may be involved here, and that's this whole structure that we have with Ottawa with respect to cost-sharing dollars for agriculture and how it impacts us. We might be better off to leave the $600,000 in Ottawa and spend the $400,000 that the province would allocate on a program that's really meaningful for us.

Mr. Chairman, I realize Kurt and I were a bit late getting to the meeting, but we got here fairly early. Down on - I don't know what street it was, there was a guy who pressed me for a couple of bucks for a cup of coffee. I gave him a twoonie. I wasn't intimidated by him, I just wanted to get rid of him. I used to do that with my kids, they'd start to get on my nerves, and I think that governments treat the agricultural industry this way, they get on my nerves and I'll give them $20 and the keys to the car and say go get a pizza, just go. It didn't do them any good, and it didn't do me a whole lot of good.

There are all kinds of issues that I think will emerge once we sit down, and there are some really bright farmers in this province. If we can sit down with some government public policy-makers, I think we'll soon discover lots of policy issues and changes that need to be made.

MR. MACDONELL: At the rally in Truro, the minister mentioned $100,000. Do you know how that works, or how it was supposed to work? It wasn't clear to me that day.

MR. NASON: Kurt might want to comment.

MR. SHERMAN: The $125,000 announcement?

MR. MACDONELL: Yes.

MR. NASON: Like my twoonie.

MR. SHERMAN: Sort of. It's supposed to be a grant to the Cattlemen's Association to cover the interest on the first year of the $2 million loan, that's what I understood it to be. And if there's 1,200 producers in the province, it's not much more than $100 apiece, is it?

MR. MACDONELL: Did I hear somebody say afterward that that money had to be paid back?

[Page 15]

MR. SHERMAN: No.

MR. MACDONELL: After a period of time?

MR. SHERMAN: The loan itself. It's a seven-year program with a two-year option to defer payments. He told us that they have it interest-free for the first two years, as well.

MR. MACDONELL: Is that what the $125,000 was for?

MR. SHERMAN: That was the first year's interest on the $2 million.

MR. NASON: Think about that for a minute, the government is going to loan farmers money, and then they said they're going to pay the interest for the first two years, but they're not going to take it off when they loan it to them, they're going to give it to an organization that doesn't have a sophisticated administrative structure, and then the farmers are going to have to apply to this organization to get their money back. That's maybe a simple policy change that somebody might think about that could be implemented right away. Why don't they get the Farm Loan Board to take the interest off in the beginning?

MR. MACDONELL: There probably wouldn't be any announcement then, so there was your twoonie. When there's so many positive things that the Federation is involved with, and I think of environmental farm plans and nutrient management systems and probably the fact that farms in Nova Scotia are fairly diversified, which doesn't seem to work into any of these federal programs at all, which are good things, you try to do something that will stave off disaster, as much as you can. The efforts of the industry never seem to be given any consideration.

Today, you mentioned about the 40/60 split between the province and federal money. If you could set up one program yourself, if we were just to talk about beef producers and no other sector, how would you design it? Any notions of what you would like to see done?

MR. NASON: First of all, I think I'd have a really serious look at where the province always looks, at how we could leverage the maximum amount of money out of the federal government for the farmers in the province. I think there's some hints and signals in the program that Ottawa announced on September 12th. In that program, if you look through it, it's plain that Ottawa doesn't really think the border is going to open all that soon, and that program is designed to manage our domestic industry so we can move ahead and build more slaughter capacity and so on. That's where I'd be looking, I'd be looking in that direction.

I believe that the minister is in Ottawa or was in Ottawa last week, and we heard last night that he's talking about a heifer retention program. Well, I'll tell you what, we have too many cows in this province, that's one of our problems. So, apparently the answer they got was the federal government would consider it. Well, I would suggest to you that they're not

[Page 16]

going to give that favourable consideration because it doesn't fit with the policy direction that was in the federal government's announcement.

I'd be starting to think along those lines, but nobody asked us or we might have been able to make some suggestions that would deliver money more quickly here.

MR. MACDONELL: I'm going to go in a completely different direction, so I don't want you to say, where did that question come from. Recently there's been a fair to-do around the price of milk, four-litre containers in particular. Can you explain for the committee the minimum retail price on those containers, and roughly where the Natural Products Marketing Council comes from with that?

MR. NASON: No. Dairy policy is one of the most complex policy areas anywhere, and I don't pretend to understand it. I'm not digging a hole for myself with some of our members here this morning by trying to explain it.

MR. CHAIRMAN: Mr. Epstein.

MR. HOWARD EPSTEIN: Mr. Nason, I wonder if I could continue with a question about BSE. I read recently that there is a move, which I think is primarily in the West, by some cattle producers to file a joint claim under NAFTA. This, essentially, would be a financial claim aimed at the American government and based on the circumstances that you were describing in that it would observe that the science has been met and therefore the borders should have been opened. Essentially they're claiming for money damages. What I was wondering was whether - you're nodding. My first point was, I wondered if the Federation of Agriculture was aware of this pending claim, and if so, I'm wondering whether you or your members have considered the pros and cons of whether they might want to be involved in this? Is there any advantage for your members in being involved?

MR. NASON: The Mexicans have a saying, don't they, may your world be filled with a thousand lawyers. I don't think we could afford to get involved in that type of an action. If you follow the agricultural media, I'm not sure how successful they're going to be. Certainly what they're doing is, within the context of NAFTA, their income has been affected by the decision of another national government, and there are provisions for this to happen, but I'll tell you, I don't know, it will be a long process, and I don't think we'd consider that here.

[10:00 a.m.]

MR. EPSTEIN: As I remember it, it was said that each farm was being asked to put up $1,000, which doesn't seem to me to be necessarily an insuperable barrier in terms of the cost, given that it's the same claim that all farms would make. It's not as if the case is going to be necessarily a lot different for everybody. The arithmetic might be different in the end

[Page 17]

for each person, but the basis of the claim would be the same. I thought I'd understood your position to be that under NAFTA the border should have been opened, and that you essentially say it's politics, not anything that should be a legitimate barrier to the opening of the border. If that's the case, I'm not sure why it is you're necessarily skeptical about the result, although you're never guaranteed in any of these litigations.

MR. NASON: We don't pretend to be experts in these trade issues, but we certainly watch the NAFTA challenges. They go on for years. How long has softwood lumber been an issue? Kurt, do you have a $1,000 to put into that, and we'll move ahead?

MR. SHERMAN: Not today.

MR. NASON: Farmers don't have the money to mount the challenge. I'm familiar with the hog industry, because our offices are close together, and I know how many millions of dollars they spent challenging U.S. trade decisions. They won the last one. Now the U.S. government has retaliated with a charge per hog that goes into the U.S., and they're into another one.

MR. EPSTEIN: I wonder if this is the kind of thing the provincial government might assist on. In any event, we'll raise that separately. Can I ask about another topic? It had to do with your reference in your written submission to the development of alternative energy. You identified the possibility of wind farms being built, presumably along with existing forms of agricultural activity. This has certainly been the case in other provinces, where farmers are able to both see profit from the land and see profit from the air that passes above the land. It seems to be compatible. What I wondered was whether any of your members are responding to Nova Scotia Power's call for proposals that has gone out over this past six months? That is, they're looking for specific proposals to build windmills to supply energy into their grid. Is anyone in your membership getting into this business?

MR. NASON: There may have been. That's an area where the greenhouse industry certainly has a keen interest. We have a small committee that's been starting to examine alternative forms of energy. We've looked at wind power. We've put together a group of five RDAs from across the province and the Federation to begin to explore the possibilities in various areas of the province, but that fell apart because we couldn't get the funding we needed to do the work we wanted. That same group has been actively looking at biogas generation, not only utilizing agricultural waste but utilizing other waste streams. We think that HRM is going to have 7 million tons a year, of biosolids. We want to look at, in fact we're making a proposal to government a week from Monday, but one of the things we want to do is look at how that can be integrated with agricultural waste to produce biogas. It looks to us like it might make an excellent part. We're looking at what's happening in other jurisdictions in this country and in Europe and the U.S., and there are partnerships being developed between the farm communities and municipalities and large energy producers who are interested in carbon credits and so on. So there's all kinds of potential there.

[Page 18]

MR. EPSTEIN: I would say there is a lot of potential and I understand your proposal for an alternative energy centre might make sense in terms of biosolids but I have to say in terms of wind, I think the moment is now. It probably doesn't need a centre and study, there might be an opportunity really to move on that.

MR. NASON: What it needs is some coordination and that's what our energy centre would provide.

MR. EPSTEIN: Could I ask about marketing and farming as between the producers and the retail sector. You do identify this as a problem. Essentially, you seem to say that the price to consumers may be the right price, but the share of who gets the dollars as between the retailers and the producers is out of whack. I have to say I have a lot of sympathy with that view, I think that's exactly right. What I'm wondering is what the moves are that you can effectively take, or that government can help you effectively take in order to change that. I'm aware that there's talk about Buy Nova Scotia programs and so on but in terms of what the big retail chains do, it doesn't seem to be all that effective, so far as I can see. There are co-ops, that's another possibility. I'm not sure what you would recommend to us as being the most effective steps that could be taken.

MR. NASON: We're constantly looking at that issue, that has been an issue with farmers in this province for some time. We talk, very often, with your colleague about an idea that he's pursuing. We started to look at an idea that we call the farm reproduction value chain recovery initiative. I would refer you to another document that we provided in your package for a quick and dirty explanation of that program. It was presented to the Resources Committee of the Legislature earlier this year. We are working on that project. I think co-ops are certainly part of a brighter future with respect to that issue. I think value adding on the farm and I think farmers in Great Britain have improved their circumstances substantially because what they decided to do was they wanted to own the product farther up the value chain. The farther up they can own it, the more benefit they can get from it. So we're looking at all of those ideas.

One of the problems we have with the Federation is that it's like the stone crusher who got the brand-new crusher and somebody said, how much do you crush and he said, I don't know, we're too busy oiling, greasing and maintaining it. We have become so tied up in these immediate issues that we just have these small committees that can get off once in awhile and think creatively about alternative energy and think creatively about how we can capture a better place in the value chain.

MR. EPSTEIN: Thanks for your help on this.

MR. CHAIRMAN: Mr. Glavine, then Mr. Parker.

[Page 19]

MR. LEO GLAVINE: Thank you for your presentation today, you are always enlightening but also confounding, of course, with the complexity of this particular issue.

One of the elements that certainly I've come to experience a little bit since becoming an MLA just a bit over a year ago and also living in a farm community, is the relationship of the Federation to the Department of Agriculture and Fisheries, the government bureaucrats. I would like for you to comment frankly on how you experience that relationship and what are some of its strengths and weaknesses, and how some corrective measures could really help the industry work closer together for the common good and common goal.

MR. NASON: I guess I would have to say we had a couple of students looking at reviewing the history of the Federation this Summer, every 25 or 30 years we bring it up to date. Industry-government relations are probably at the lowest point they have been for the past 25 years, that's looking at the stuff we reviewed this Summer. I think that's having an impact on both the farm community and government. Again, I refer to the event in Truro when a former minister, I think, made the comment that being Minister of Agriculture can be an extremely difficult job but it's a lot easier if you're talking to farmers and building a good relationship with them. I would have to say that that relationship is not good and hasn't been for the past three or four years. How you correct that, I don't know.

MR. GLAVINE: That, at least, gives me a bit of the scope there. Thank you, Laurence.

In the 1970s I attended some of the Kings County meetings in regard to creating the bylaws for the protection of farmland in Kings County. Recently, at the annual meeting of the Kings County Federation of Agriculture, I was really taken aback to hear that farmers now may want some review of that because they see their future and so on, and their families, not in farming but rather in perhaps being at that point, especially with two or three very bad years of needing to sell the land for their future.

Are we going to have to go to a land bank concept here? We're talking about one of Canada's five primary soils areas. Is the Federation a proponent of the land bank concept in order to help farmers bridge from their operation to their retirement and also, to keep in view the generations of the future, and not the immediacy of needing income?

MR. NASON: Basically what our policy is, with respect to the protection of farmland, is yes, we're proponents, we think farmland needs to be protected. However, we also realize that farmers always need to be able to get the highest economic value for their land. If the public wants to protect farmland, then there is some onus, we would say, on the public to participate in the protection of that farmland and it shouldn't all be passed on to farmers. We saw what happened in Ontario just a week ago, the difference between $10,000 and $250,000 an acre is the price Mr. Brander is paying to protect agricultural land in Ontario for the future. Is that fair? I don't think so.

[Page 20]

Ask Kurt. That is all he has and he's losing that, is the value of his land. If you take that away from him by putting planning controls in place to protect it for the future, is that fair?

MR. GLAVINE: Laurence, last February, I was a little bit optimistic when the Premier at the Progressive Conservative AGM announced there would be an ambitious program to get Nova Scotia beef into institutions. I was wondering, could you comment on how much progress you are aware of, that has been made in that direction?

MR. NASON: Apparently the study is going to be released soon. That's a hard one for me to understand. We recognize that there are some challenges getting local beef, you can't take a side of beef and a bag of turnips to the back door of the hospital or the school. But you know, if you look at the correctional system in Nova Scotia, there's an area where the province has total control - not a big market, but are they going to serve Nova Scotia turkeys in the correctional institutions at Christmastime? Probably not, but why not? That seems like a really simple gesture at least to give us some optimism while we're waiting for the study to be completed. I think there are some huge opportunities there, it will stimulate value added in the farming community and so on, and like I say, we recognize that there are some significant challenges involved. Give us the opportunity and I think the agricultural farmers in this province would jump at the opportunity to supply local institutions.

[10:15 a.m.]

MR. GLAVINE: Last year the hog producers were going through an enormously difficult time, with some of the lowest prices they had been getting in years, and when the government did announce that there would be, once again, a loan program, not really that much direct help to the farmer, the hog producers were not very interested in having the Farm Loan Board manage that particular loan program. Do you see any problems, again, with the Farm Loan Board and its operations that would cause people within the farm community to be looking somewhat anxiously about how they were making loans and handling money from government programs? I'd like a comment on that, Laurence.

MR. NASON: When times get tough, you tend to have a bit of an acrimonious relationship with your banker. I think that's natural. I think that the Farm Loan Board is a structure, they have legislation that defines what they can do and how they can do it. For example, with the loan that was just announced, the beef one, when we started to talk about a loan program, naturally we thought the Farm Loan Board should be there not to administer the Rural Credit Act and then their rules, but there because they're the most convenient delivery agency for any program.

I think that they tend to want to do everything through their structure, and what we were suggesting is, hey, you are the most convenient organization to administer this program, but we're not looking for a loan from the Farm Loan Board; hell, we have enough of those

[Page 21]

now. We're looking for something different. So, yes, like I say, I think that if we go through times like we're going through, there's probably just as many farmers complaining about the chartered banks and farm credit as well.

MR. CHAIRMAN: Mr. Parker.

MR. CHARLES PARKER: Gentlemen, I guess I'm sort of an optimist, I like to look at the future and say there's a better way; it has to get better, it can't get any worse. My colleague had earlier mentioned about local marketing, and, really, when you come down to it everything is local. Farming has changed a lot over the last three or four decades. It used to be that every bit of food, pretty near, that was produced here was sold here, or in other words there was no other competition coming in from out West or from the U.S. or wherever. A lot of people grew their own food on the farm, and if they had extra beef, they would sell it to the butcher who in turn maybe sold it to the local grocery store. So it stayed within the local county or within the province. As we know, with modern transportation, that has changed very much.

I still feel there's opportunity there to take back the local market. I know you have some initiatives. I understand there's some hope, perhaps, with the abattoir in P.E.I. that's going to be putting beef into the co-op stores and maybe into some of the other stores. Maybe you could start off giving me an answer to that. Are Sobeys or SuperValu looking at any of the excess market from the abattoir in P.E.I. to go into their stores?

MR. NASON: I'm not aware. I know that the abattoir in P.E.I. was started to service this Atlantic Tender Beef program that Co-op Atlantic has. They're going to have other product that they're going to have to move somewhere, but I'm not aware of who they're talking to.

MR. PARKER: I thought I'd heard, maybe at the rally in Truro, the day I was up, that somebody mentioned that there may be some extra product there that may well be going to Sobeys.

MR. NASON: That could be.

MR. PARKER: That's a positive thing, if that's going to be a start. I'm reading also in your literature that you supplied us about maybe buying shelf space in the retail stores or buying some area for local product.

MR. NASON: Yes.

MR. PARKER: Can you fill us in a little more on that?

[Page 22]

MR. NASON: One of the ideas that surfaced at the meetings we've had over the past couple of years is the way it works in these large retailers is companies buy - if Parker's greenhouse wants to sell flowers at Sobeys, you buy the space. I understand that an inch of space in the freezers is hugely expensive. One of the ideas that a group that sat down to examine it came up with was to ask the government to buy space for Nova Scotia product in these large retailers and challenge the industry to fill that space, so there would be local product available.

MR. PARKER: I would think once you got started, even if you bought six feet or eight feet or whatever in the big chain store, that the demand would be there. People would know this is produced here in my province and that's what I want to buy, if it's anywhere close to being competitive in price. I think the demand would create more space, and in time that's going to help our local producers.

MR. NASON: One of the things we've seen, this BSE crisis has hammered home, and there's a whole series of events, Walkerton and the avian flu, I think consumers are more aware of where their food comes from, what they're eating, how it's grown, and they want to have some kind of a connection with the people who are producing it. I think that's a really positive thing. One of the areas in the province that had been most successful with this is Cape Breton, with their "Cape Breton first" project. Maybe we need to revisit that and redesign it so it extends across the causeway into other parts of the province.

MR. PARKER: I think it is a positive thing. Many consumers out there want to buy local, they want to support our local farmers. I think you can see that. Some farmers have worked on the upside of this, in that they have been selling off the farm a bit more, some even to the point where their cull cattle that are practically worth nothing are spreading the word through the grapevine that they have a quarter or a side or 10 or 20 pounds of hamburg, whatever, they take orders locally, and the consumers are supporting that. That's a positive local initiative, but there's more that needs to be done to support the local end of it. I'm sure the consumer would come behind it.

Just one other thing. We had a presentation here by the pork producers a few months ago, and one thing they had suggested was that a price per pound would be collected at the retail level. I think it was 10 cents a kilogram for pork. Does that have any merit to it, or some potential?

MR. NASON: I think that we've included a copy of Page 4 of their presentation in the package of material that we've presented just as a reminder. That's something we're working on, and there needs to be a lot of work done on it. It started with pork, and the Federation, and now we've brought in the sheep producers and the beef producers. We've been talking to some of the hort people. I think that it will be a year down the road, but we'll be approaching government at some time in the medium-term future with a proposal that would stabilize prices for farmers.

[Page 23]

MR. PARKER: It seems to be a good initiative that has some real potential to bring money back to our local producers.

MR. NASON: Yes, exactly.

MR. PARKER: I would encourage you with that one. I just want to shift gears a little bit. You mentioned earlier on that we're close to the New England market, and I know there are some producers here who are shipping raspberries and blackberries and some other crops. It's a huge market and we're so close to it. Can you fill us in on any initiatives that are taking place there? What more needs to be done to tap into that particular market?

MR. NASON: I think that a lot of that focus now, with respect to tapping into that market, is at the border and some of the procedures that have been put in place to protect Americans from us Canadians. As I say, there's a huge potential there. We sort of take brief forays into that market to try to develop it. It's expensive to develop those kinds of markets, and we've just never made the commitment, I don't think, to take a major run at it.

MR. PARKER: That's certainly something government could help support, I would think, if they could get a trade mission to New England, to Boston or wherever, to see what new markets are there for crops or products we could ship into the U.S.

What new things do you see in agriculture in Nova Scotia? I know in my county I have noticed we have an alpaca farm established, that's something new and different to our province. Some people have gotten in mushrooms, there are some new possibilities and new things out there. Are there any suggestions or what's down the pipeline that might be new initiatives in our province?

MR. NASON: I would have to think about that for a while.

MR. PARKER: There's nothing . . .

MR. NASON: Well, sure. At one time, the ChronicleHerald, it might even have been you that called and said, what good things have happened in agriculture in the past year. I said, nothing. They said, well think about it for a few days and I started to make a list and there were all kinds of good things that happened but I never see them, I don't get involved in those.

MR. PARKER: I know one new thing that is maybe being developed here are markets for certain types of herbs. It's a spinoff from the horticultural side of the industry but there are some positive things out there, there's no question. Thank you.

MR. CHAIRMAN: Mr. Theriault.

[Page 24]

MR. HAROLD THERIAULT: Thank you, Laurence for your presentation. You spoke of going through the perfect storms in agriculture. I could tell you about a lot of perfect storms in the fishery and in aquaculture. Maybe you could compare some of those to agriculture and where you're headed. The best prophesy for the future is looking at the past.

In the fishery there were subsidies on boats, on fish when the storm came around, and all of a sudden with great wisdom from somewhere there were people who could figure out how to eliminate those subsidies, especially to too many small, independent fishermen around. It was nothing but a nuisance to Ottawa and to this city, Halifax. The great thing was to do away with them, do away with the fishermen, do away with the independent fishermen. They used the word "conservation" to do all this with, they're still using it, it has nothing to do with conserving the stocks, we've seen that for the past 12 years. It has to do with control of the people and how many are involved in it, where the money will go, and how it will be directed. That is taking place in the fishery, with over 50 per cent of the inshore fishermen pretty much gone now and more to go, and they're going to go because the force is there.

They have used the price. Do you think one case of BSE has stopped this beef from going across this border and still stopping it? Do you really, truly believe that?

MR. NASON: That's happening. It may not have been the cow.

MR. THERIAULT: There are more forces there than that one sick little calf. It is all control, it's political control from both sides, both countries, all over the world now. We're bringing fish in here, haddock, cheaper from China than we can catch them. The whole force is gearing it so a few own it all. It's happening in aquaculture right now as we speak.

There were a lot who got into aquaculture over the past few years. I've watched a lot of the small fellows go out of it. The bigger groups are coming in and taking over. There will be a half dozen who own all the aquaculture in Atlantic Canada when it ends up. My question to you is, do you see that coming in agriculture, that there will be four, five, six or seven big corporations owning all the agriculture in this province?

MR. NASON: Yes, I think that that's certainly something that could very well happen. One of the things that we've suggested that somebody might take a serious look at is the multifunctionality of agriculture, the externalities that are produced by farms. One of the things that we're very fortunate to have is we still have small farms. We don't have any of the large farms that have created problems with the community in other jurisdictions here and in the U.S. Our farms are still relatively small. Most of our farms are still managed by families and not by corporations. I think that is a wonderful opportunity.

[Page 25]

[10:30 a.m.]

We have to move quicker, be smarter than the fishermen were, if we're going to prevent that consolidation from happening. Maybe the industry wants the consolidation to happen, I don't know. Guys like Kurt - he's a small farmer - is not going to be farming a year from now or six months from now or next week maybe, unless we can focus more of our policy in that direction.

MR. THERIAULT: That is the problem - the subsidies. It was the problem in the fishery because the taxpayers are saying, we can't do this anymore, we can get our vegetables, we can get our beef, it was just brought up here about the price of beef. The price of beef hasn't gone down for the consumer. If you were only getting 60 cents a pound for your cattle and we could go buy hamburger for $1 at the supermarket, the people would love to subsidize that. But we're paying the same price in supermarkets for beef as we were five years ago, nothing has changed there. So that is what I mean by the power is there to put you out of it, Kurt, you have to go out of it, the pressure is there to do it and I don't know how you're going to stop it. I don't know how.

We have gone all through this in the fishery. We have beat on tables in meetings for 10 years and while we were beating on the tables it was happening outdoors, in back of us.

MR. NASON: I have to say, very tritely, that farmers are different than fishermen. We're higher up on the evolutionary scale and we're not gathering anymore. So maybe we'll be able to solve that before it hits us. (Laughter) It's related to environmental sustainability too, small farms are sustainable, with large farms there is a question. One of the things when we started to think about that we brought a guy in from the University of Missouri, John Eckhart, who is kind of the guru of small, sustainable agriculture in the U.S., to try to stimulate thinking on preventing the very thing. Yes, it's related to subsidies, it's related to public investment in agriculture and where that public investment has been focused. You just told us where it was focused in the fishery and if we're not careful, we'll end up with those same types of problems.

I think I have already said that most farmers in this province will tell you that the investment that government is making right now in this industry isn't doing anything for the profitability of the industry. If we want to save farmlands, that's the obvious way to save them. If he can make a living farming, he's not going to think about selling his farm.

MR. THERIAULT: I wish you the best of luck, thank you.

MR. NASON: You just keep plugging away.

MR. CHAIRMAN: Mr. Chataway.

[Page 26]

MR. JOHN CHATAWAY: I have a brief question, Mr. Chairman. I certainly appreciate this opportunity and to Laurence and Kurt, I find this very interesting. I'm not a permanent member of this committee but this is certainly very informative and we have touched on many of the challenges agriculture does have in Nova Scotia and in Atlantic Canada, I would think.

I just have a couple of comments. If, all of a sudden, we could make a law tomorrow saying okay, Nova Scotians, you can only buy and eat Nova Scotia beef, how much of that market if we did that?

MR. NASON: People wouldn't be eating much beef.

MR. CHATAWAY: Exactly, what is it, still one-third of all the beef . . .

MR. NASON: We bring in about 75 per cent of the beef we eat. One of the interesting statistics there is that Nova Scotians eat about 22,000 cull cows a year. That is what we bring in here, the equivalent of 22,000 cows a year, so, we only have 50,000 cows in this province, so there's a huge opportunity.

MR. CHATAWAY: It would be all of the dieters getting off beef if we had some law like that right away, so we certainly have a challenge. What all Nova Scotians, the consumers, want mostly, and maybe they should, but they do not say it on a permanent basis, is we have to change our diet dramatically and there is certainly a challenge in that regard.

The other thing is it's been up on the table about Brand Nova Scotia. Has the Federation of Agriculture ever had much to do directly with the people who are organizing Brand Nova Scotia? I'm more aware that Brand Nova Scotia does not mean just agricultural products. Right now they deal with at least 18 states in the United States or countries, and everybody is adopting them really, and it's going forward. It's Brand Nova Scotia, it was figured out in Nova Scotia, it's made in Nova Scotia, and it's just a wonderful story, but it's not unique. What agriculture things did you people have in this talk of Brand Nova Scotia?

MR. NASON: That are unique?

MR. CHATAWAY: What input you had, because it's going to happen, I think, sooner than later.

MR. NASON: We haven't had a whole lot of input. We're involved to some extent with Taste of Nova Scotia, and we're certainly involved with the marketing branch, the Department of Agriculture, but we also recognize that Brand Nova Scotia requires more resources than I think the Government of Nova Scotia would be willing to commit or even could commit. What's it cost to brand Reebok or Coca-Cola or any of those major brands? Look at what New Zealand has done with their lamb and kiwi, but that didn't come overnight

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and it didn't come easy. There was a large industry and public commitment that developed those products, and I'm not sure we have that here.

MR. CHATAWAY: We certainly consume a lot of beef from outside the province. Certainly Brand Nova Scotia is a good concept, and it has to be emphasized that it was made in Nova Scotia. I just wondered.

[10:37 a.m. Mr. Brooke Taylor took the Chair.]

MR. CHAIRMAN: Mr. MacKinnon.

MR. RUSSELL MACKINNON: Mr. Chairman, one topic that hasn't been touched here, but I know it's a major issue, is with regard to water supply, water resource. What is the situation as it stands now in the agricultural community in the Province of Nova Scotia?

MR. NASON: Strategically that's one of the most important issues that our industry has to deal with. The agricultural industry is totally dependent on abundant, clean sources of water. We're discovering now that we have to share those resources with the rest of the community, and we have to learn to do that in some cases. We're discovering that because we're a fairly large and fairly visible industry that every time something happens to the water source, we're suspect. That's an issue that we need to probably focus more of our time on as an industry.

One of the things that's happening now is that we've established water clubs, we have three of them in the province, one in the Valley, one in Colchester and one in Cape Breton. What those clubs do is bring a group of farmers - for example, from Boularderie Island - together to discuss the issues, and those water groups were supposed to be able to access funds, which as I mentioned earlier were federal dollars that have been tied up in agreements and so on for the past year or so. It's being delivered in other provinces.

It's going to require an investment on the part of the public, an investment on the part of the industry, to make sure that we can maintain clean abundant water for everybody, for the agricultural community and the greater community.

MR. MACKINNON: Is there any indication that the water supply is depleting?

MR. NASON: Worldwide.

MR. MACKINNON: In Nova Scotia?

MR. NASON: I'm not aware that it's depleting in Nova Scotia, but I think, certainly, we're seeing in lots of parts of the province where aquifers can't be accessed as close to the ground as they could in the past. For example, we have to learn to manage our water better.

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Anthony Van Oostrum, a former president of the Federation, tells me that he has a farm just under the North Mountain, and he would tell you and show you where it could be accomplished that he could store enough water for his entire farm in the Spring, just by managing the water that comes off the mountain. We've never had to do that before, and we're going to have to learn how to do it, even in places like Boularderie Island, water is an issue now. Those farmers up there are finding that we get a year like 1997, like 1999 and 2000, that the surface water that they're able to capture isn't adequate to continue to grow the crops, so we need to look at other options.

MR. MACKINNON: Is there any measure of how the cost of production to the farmer has increased because of a shortage of water supply?

MR. NASON: I think you could probably do some arithmetic and come up with some numbers, certainly in the Valley.

MR. MACKINNON: Perhaps we can take that on notice from your organization to provide that detail for the committee.

MR. NASON: We could certainly get back to you with some information on that.

MR. MACKINNON: I notice in the provincial water strategy that came out approximately three years ago, the reference to the agricultural community was minimal if non-existent.

MR. NASON: We weren't involved in that.

MR. MACKINNON: Has there been any consultation with the agricultural community since the release of that report, in addressing the issues of water supply with the agricultural community?

MR. NASON: Yes. When we jumped up and down and raised Cain because we weren't involved with it and we considered ourselves a major stakeholder, we were invited to a meeting at the Terminal Building, about a year and a half ago. But other than that, no.

MR. MACKINNON: What's the result, the outcome from that meeting . . .

MR. NASON: I couldn't tell you - we had the meeting. It was nice. The coffee wasn't as good as it is here. One of the impacts of that provincial water strategy that we're starting to see affect our industry now is that document that says that by 2008 all municipalities in the province have to have a plan developed that shows how they've protected their water supply.

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We're currently going to meetings on a regular basis in the Town of Stewiacke. Stewiacke has a 37-square-mile watershed designated, the St. Andrews watershed. In Berwick, we've been to meetings with the Town of Berwick to talk about the protection of their water. They don't have a water utility, so they're using the Municipal Government Act to try to protect the aquifer that the town residents access water from. We've been to meetings in Parrsboro with the Parrsboro Town Council and Cumberland County Council with respect to the designation of a watershed there.

MR. MACKINNON: The reason why I ask that is because, for example, in my community, my constituency, the Sydney watershed, they have a meter that monitors the water table and that supply. It takes into account all the seasonal fluctuations, variations, dry weather, wet weather, rain, snow, and so on. Over the last 15 years, that water supply has declined somewhere in the vicinity of about eight inches. Now what they're doing to maintain a quality water supply for the urban core, they've dug deep-water wells in the Mira district, and as a result of that, there are, somewhere in the last few years, over 200 homes that have lost water supply.

I would imagine it's a similar-type proposition in the agricultural community. I was a little disappointed it's not included in the water strategy. Mr. Cameron from the Department of Agriculture appeared before the Public Accounts Committee several years ago. I believe you, Mr. Chairman, were on the committee at that time. He complained publicly that the Department of Agriculture had to move and take initiatives itself because the Department of Environment and Labour was dragging its feet. Have you seen any substantive initiative from the Department of Environment and Labour since that time - that's really what I'm trying to get at - to deal with this issue of groundwater?

[10:45 a.m.]

MR. NASON: Not with respect to agriculture, no. They perform their function as policemen, there's permitting processes and so on that farmers have to go through, but other than that, I haven't seen any proactive approaches. That's not to say that there hasn't been some proactive approach taken, but I haven't seen it.

MR. MACKINNON: I'm just going to shift gears here, just slightly, with one short snapper on the CAIS program. Why is the government forcing farmers into this program when it seems to be such a dysfunctional program, as you've described?

MR. NASON: I don't know, maybe you should ask some of the government members. I don't know. Kurt may want to comment. I think it's related to that they made this commitment, we're going to do this, but we've pleaded with them to leave it for another year so we could at least learn to understand it, and so on. They put the program in place. I suppose they were delighted to have an opportunity to force farmers to join it, because this was the program they said was going to be the answer. Kurt may want to comment on that.

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[10:46 a.m. Mr. Russell MacKinnon resumed the Chair.]

MR. SHERMAN: You've said most of it. I think the approach was they want one vehicle to deliver that service to all sectors in one uniform package, and that's part of why it doesn't work. We aren't all able to be packaged into one container. There used to be different programs for different things, and this is supposed to be the combined answer to everything. It may work, once they get it fine-tuned.

MR. CHAIRMAN: We have 12 minutes left, one minute to announce the next agenda, but we have time for some short snappers. Mr. Taylor, you're first, or do you want to wait since you have a motion?

MR. TAYLOR: Okay, sure.

MR. CHAIRMAN: Mr. MacDonell.

MR. MACDONELL: My concern around the connotations of buy local or Brand Nova Scotia is there's nothing just purely in that promotion that guarantees the farmer will get a price. They might have their stuff on the shelf, but they're going broke doing it. Kurt, I guess for me I would like to know, under the present circumstances, how long you'll be farming. What's the situation for you? I don't think that's something that's really clear to this committee, the straits that you're in.

MR. SHERMAN: I haven't got a clue how long I can keep going. I have no sense at all of where I'm going to be hardly next week. The $400 recommendation we made last year to the task force was under the assumption right then that this was all going to be back to some kind of a normal market by now. We're in worse shape now than we've ever thought we would be in at that time. Most of the people in the industry had some kind of faith in the system or the government that there would be something that would come along to keep us propped up and going or give us a little hope, but everything that's been handed out to us to look at so far has been useless or an insult, if you want my opinion.

I don't know where I'm going to be or how I'm going to keep going. I have one advantage for my own farm, and there are other people in the beef industry who own land on lakefront or shorefront, and they're worried that their land is good for other things. I'm on a kind of swampy sidehill, wet piece of ground where nobody is going to develop anything in the next 100 years anyway. What the Farm Loan Board tells me is no panic, we're not going to push you, but they don't want it anyway. If I had a prime piece of development land, I'm not so sure they'd be saying no, no, we don't want it.

There are people in that situation in the industry, nothing's happened yet but they're sort of feeling like somebody's breathing down their neck, looking and saying this would be good for something else. If push comes to shove, we can't pay what's required. If anybody

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came knocking on my door tomorrow and said we're going to call our loans or whatever, I'm done.

MR. CHAIRMAN: Mr. Parent.

MR. PARENT: A very quick question in terms of organic products. You talked about the New England market, the organic product market won't sustain in Nova Scotia because I don't think people are willing to pay the extra price. Some of the urban dwellers, maybe in the New England market, might be. I'm just wondering if you have any thoughts on its future.

MR. NASON: If you look at what's happening in Europe, the Dutch agricultural industry is retrofitting itself, they think that 10 per cent of the production will be organic in the next 10 or 12 years. A huge potential. That's the way with a lot. If you talk to the pork guys, they'll tell you we have a good product, if we can get it into New England, Nova Scotians can eat pork from somewhere else, because it will bring a premium.

MR. CHAIRMAN: Mr. Parker.

MR. PARKER: I just wanted to ask you a question about the dairy industry. It's certainly changed over the years and it's becoming more and more concentrated. I know in my county of Pictou, we had dozens of dairy farms at one time, and now I can probably count them on two hands. It's decreased considerably and the dairy farms are getting bigger. I guess one reason is that the farmers are looking at the supply management system, wondering how long it's going to be around, and the price of quota is very high. You can become perhaps an instant millionaire if you sell out your quota. Do you have any comments on the future of the dairy industry in Nova Scotia?

MR. NASON: The dairy industry is part of this ruminant livestock industry. What ruminants do is they take raw cellulose and turn it into protein that people can eat. We excel in this province at growing that roughage that these ruminants can convert to protein. The dairy industry produces milk, the beef industry produces beef, so I think there's a huge potential for ruminant livestock in this province. At the turn of the century, we were farming about 4 million acres; now, today, we utilize under 1 million. So there's 3 million acres out there that are ideal for forage production, for some of the areas, blueberries, a lot of that land has a huge potential for blueberries.

I think the dairy industry has a bright future in this province. I made the comment earlier, I didn't want to comment on the milk price and I'm certainly not an expert there, but as I look at our dairy industry and the skills that we have and the way we've learned to manage dairy cows, I think Nova Scotia is one area that can probably compete in a world market.

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MR. PARKER: Good to hear. Great.

MR. MACKINNON: Mr. Taylor.

MR. TAYLOR: Mr. Chairman, again, I want to emphasize how blessed we are to have the Nova Scotia Federation of Agriculture in this province. Laurence, you and your group always do look at the big picture, and I recall quite vividly, when we were putting together the recommendations, the now-President of the Nova Scotia Federation of Agriculture, Don Cox, spoke about how important that recommendation was. He said, in fact, last night that the most important recommendation he felt that came out of the task force was the one to establish the industry/government committee to look at post-BSE impacts, and while it is late, in terms of formation, I think that is a positive. The P.E.I. abattoir is another piece of the big picture, the puzzle, and "Nova Scotia first" and the border and so on. I don't expect the border will open, myself, if we continually berate our American neighbours, but that may not be shared by everybody and apparently it isn't.

But the farming community, right across this province, I find the farmers and their families are level-headed, they're professional, they're giving, and what they're asking for now - and I want to focus on the livestock sector, Mr. Chairman, the livestock sector is reeling. Farmers are going out of business, some are on the brink of going out of business, and what they need - and I don't want to get into an argument over definitions. I don't consider it a subsidy, I don't consider it a grant, at this point what the livestock sector needs is an investment, an investment so they can sustain and be competitive. It's no good to sustain just for the sake of sustaining.

The Heifer Retention Program, Laurence, the little bit I know about it, was offered to the federal government so farmers wouldn't be selling all of their young heifers. Their concern was - now this is from government, not from industry and I apologize for that - that if the livestock sector continued to sell breeding stock and animals under 30 months, then we're going to have some difficulty when things do improve, and things will improve down the road, I really believe they will, there are a lot of positives out there.

Right now in the short term, that CAIS program has been nothing but an unmitigated disaster. You talked about something dysfunctional, it has been when only 11 per cent of the people who applied received some compensation and nobody, according to Laurence - received anywhere near $300 per head. So, I think, clearly we have to craft a letter as an all-Party committee to the federal Minister of Agriculture, asking that the program be adjusted to reflect the situation in Nova Scotia that the livestock sector is facing and it has to be adjusted immediately. It is too complex, there is dignity in simplicity, and that program has to be amended to assist people like Kurt and others out there in the livestock sector.

I guess all ruminants are being impacted and CAIS is supposedly, Laurence, I believe, available we're told to just the livestock sector or the . . .

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MR. NASON: No, it's an industry-wide program. All the sectors are having just as much problem with it.

MR. CHAIRMAN: Would you like to put that in the form of a motion?

MR. TAYLOR: Yes, Mr. Chairman. I would make a motion that a letter be sent to the federal Minister of Agriculture, pointing out that the CAIS program is not working and you might reinforce that by saying that every farm organization in this country, Canada, requested that it not be implemented until it was actually understood. It still isn't understood, it is still not working and perhaps I could leave it at that at this particular point.

MR. GLAVINE: Mr. Chairman, I second that motion.

MR. CHAIRMAN: What we'll do, before we vote on it, just for the knowledge of all members of the committee, is once a letter is drafted it will be circulated so everyone will have an opportunity to make sure the wording is acceptable and there is pretty good symmetry of the thought processes among all three caucuses. John.

MR. MACDONELL: That's fine and after we vote on this I would like to make a motion, please.

MR. CHAIRMAN: Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

Mr. MacDonell.

MR. MACDONELL: I would like to make a motion that we write a letter and send it to our provincial Minister of Agriculture and Fisheries, to direct him, in consultation with the Federation of Agriculture to use his 40 per cent dollars that would be attached to a federal program, that he use those dollars to come up with a made-in-Nova Scotia solution.

MR. CHAIRMAN: Is this the CAIS program that you're referring to?

MR. MACDONELL: The Nova Scotia dollars would be attached to the CAIS program but that's not working, so what I'm saying is that he use those 40 per cent dollars for a made-in-Nova Scotia solution to help the industry.

MR. PARENT: Mr. Chairman, could I say something?

MR. CHAIRMAN: Mr. Parent.

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MR. PARENT: I was just wondering if there is one slight change he would consider rather than that he go ahead and do it. I really think it's important that if he looked at it very seriously and I would agree with you wholeheartedly on that, I'm just wondering if the motion is jumping a little too far ahead at this stage?

MR. MACDONELL: I don't know whether we're actually splitting hairs. I know the wording that we send them, he's going to consider it, so I'm not sure whether just asking him to consider it is strong enough. I think we're 18 months down the road to disaster and I'm really worried.

MR. CHAIRMAN: As a committee, we can make recommendations but we can't change public policy.

MR. MACDONELL: Exactly.

MR. CHAIRMAN: Mr. Taylor.

MR. TAYLOR: I understand where the member is coming from but I guess most recently I've been told that the minister left an offer with the federal Minister of Agriculture last week during our meetings, asking that the federal government ante up on that 60/40 formula. Everything seems to be based on this bloody 60/40 formula where 20 per cent of the heifer herd would be retained and $300 a head expedited out to the beef farmers in Nova Scotia. I'm wondering if someone were to support the resolution that you're offering - which I think has merit on its own - if it would be sort of conflicting with that, that's the only concern I had.

MR. MACDONELL: The member for the beautiful Colchester-Musquodoboit Valley raises a good point. There's nothing in this motion to pre-empt the minister from offering something better. So, if he wants to do that that's fine by me.

MR. CHAIRMAN: Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

Mr. Nason, do you want to make a quick closing remark?

MR. NASON: I was doing some arithmetic here based on $300 a head. I want to say we have left you all with a copy of this. It's called Agriculture And The Community In The Next Decade - Developing a Strategy for Sustainable Agriculture in Nova Scotia. We refer to this as the basis for a planning exercise that perhaps needs to be undertaken in the province. It identifies the issues and those issues haven't changed.

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Mr. Chairman, I would like to thank you for the opportunity and certainly, I would close by saying that this is an Economic Development Committee and the issues that we've talked about today certainly have a huge impact on economic development in rural Nova Scotia. I think one thing we haven't talked about at all is the impact this is having on other businesses.

Cattlemen have spent about $30 million a year purchasing goods and services from other Nova Scotia businesses. In that past year they've had half of that to spend. That has to have an impact right across this province. If you talk to retailers in Truro, they'll tell you that there has been a huge difference in the amount of business that they've done. I have talked to the local Co-op, he tells me that they used to sell 20 wheelbarrows a month and now they don't sell any. They would sell 30 pairs of rubber boots and he said, those aren't big, expensive items but boots, wheelbarrows, forks, bags of grass seed add up and it's having a serious impact right across this province. Somebody needs to take a serious look at that impact fairly quickly.

MR. CHAIRMAN: Thank you and Mr. Sherman as well for your very thoughtful presentation, both of you, and answering questions of the committee.

At our next meeting we have the Atlantic Provinces Trucking Association, Mr. Ralph Boyd, President will be coming in to give an overview of the industry challenges, opportunities and economic and employment impacts. That is on December 7th at 9:00 a.m.

Motion to adjourn.

MR. MACDONELL: So moved.

MR. CHAIRMAN: We are adjourned.

[The committee adjourned at 11:03 p.m.]