HALIFAX, MONDAY, APRIL 7, 2003
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
5:05 P.M.
CHAIRMAN
Mr. David Hendsbee
MR. CHAIRMAN: Good afternoon. I would like to call the Subcommittee on Supply to order. We're here to debate the Nova Scotia budget for the fiscal year 2003-04. The estimates are before us, and we have a number of estimates to deal with in this Red Room. The time is 5:05 p.m. This afternoon we have the Honourable Gordon Balser, the Minister of Agriculture and Fisheries.
Resolution E1 - Resolved, that a sum not exceeding $40,118,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Agriculture and Fisheries, pursuant to the Estimate and the business plans of the Nova Scotia Crop and Livestock Insurance Commission, the Nova Scotia Farm Loan Board, the Nova Scotia Fisheries and Aquaculture Loan Board and the Sydney Steel Corporation be approved.
MR. CHAIRMAN: I would like to ask the honourable minister to introduce his staff. You can make a statement up to one hour and then we will open questions to the floor. Your time, Mr. Minister, is 5:07 p.m.
The honourable Minister of Agriculture and Fisheries.
HON. GORDON BALSER: I will start by saying it's a pleasure to be here to talk about the budget estimates. I look forward to this. It's the first time that I've been in the Red Room, so it will be a new experience for me in terms of being a minister talking about his estimates. I'm pleased to be here with my deputy, Peter Underwood, and Bob Mosher from the department. They will be able to provide input where it's needed.
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As the new minister in an entirely new portfolio for me, I was quite impressed and surprised by the variety and depth of things that go on within the department, especially since the merger. When you have agriculture and fisheries coming together, initially you kind of question why those two, but the more you're involved in the department and portfolio and the issues, you see that there are so many similarities. Having had the opportunity to meet with many of my colleagues across Canada, you see that many jurisdictions that have the opportunity are moving in the same direction, so I think there was wisdom in the strategy and as we go forward I can see that there are many synergies that will emerge.
As we move into a new fiscal year, the department is very clearly engaged in a number of policy initiatives that will shape the future of both sectors, agriculture and fisheries, and as I said there are tremendous opportunities for synergistic developments.
The Agriculture Policy Framework, or the APF as it's called, is a federal/provincial/territorial effort that will clearly set a strategic framework for the agriculture sector over the next five years and beyond. There's been a great deal of work that has gone on in that area and we're moving forward. Most of you are aware that that framework centres on five areas: the environment; food safety, food quality; science innovation; renewal; and business risk management. We clearly hope, with the federal government in concert with us, that this program will commence this fiscal year.
You're also well aware that Nova Scotia benefits from a strong commercial fishery, which is truly the lifeblood of our coastal communities. Over the next year the department will continue to participate in a national fisheries review program. This policy review will set the direction for long-term management in marine resources, including aquaculture.
Rolling out of that, the Aquaculture Policy Framework sets a longer vision for Canada's aquaculture industry. The department is working closely with the federal government, the Department of Fisheries and Oceans, to move this sector ahead. The intention is to focus on environmental monitoring and the development of a new national aquatic animal health program.
Nova Scotia prides itself on its sports fishery and the department is working closely with the federal government to try to develop agreements on freshwater fish habitat and recreational fisheries.
The common theme throughout the department is the need to focus on economic growth. It's a thread that runs through both sectors. In 2002 the department initiated a signature strategy for agriculture and fisheries with the government's broad economic growth agenda. The department, along with its partners - and this is clearly a partnership effort - wants to share leadership in terms of setting the course for agriculture, fisheries and aquaculture.
I was very pleased when I was Minister of Economic Development to bring forward the Opportunities for Prosperity document, and within that document agriculture and fisheries have been identified as vital economic sectors for the growth of this province. These resource industries remain crucial to the future of Nova Scotia's economy, particularly in rural Nova Scotia. Agriculture, commercial and recreational fisheries, aquaculture and related businesses are clearly the economic base for most of our rural and coastal communities. The industry employs over 28,000 Nova Scotians and contributes $2 billion to the economy.
On the agriculture side, close to 4,000 farms produced $408 million in cash receipts in the last fiscal year. Seafood continues to be a major part of Nova Scotia's exports, last year we posted a record of $1.2 billion. Nova Scotia's food manufacturers exported to over 81 countries last year. There are about 4,000 people employed in agriculture-related manufacturing and 1,000 in agriculture services.
I would like to take a moment now to talk specifically about the agriculture sector. The statistics of the census released last year show there have been significant increases in the agriculture sector in the last five years. The capital value of farms in Nova Scotia increased by 24 per cent, to $1.69 billion in 2001; reported blueberry acreage increased by 24 per cent, to a total of 37,508 acres; poultry production increased by 30 per cent, from 31 million to 41 million kilograms; bee colonies increased by 16 per cent, to 7,927; and the area greenhouse vegetation production increased 35 per cent, to 22 acres - greenhouse tomatoes are now the province's highest-value vegetable crop.
From the early 1990s to 2001, tomato production grew from the equivalent of 6 to 7 per cent of the total annual provincial tomato production to about 26 per cent; reported maple taps increased by 13 per cent, to 330,513; the number of mink farms at the time of the 2001 census of agriculture totalled 501,533, an increase of 28 per cent from 1996; nursery crops increased from 555 acres to 1,000 acres; vineyard acreage increased from 139 to 268 acres; potato acreage increased by 8 per cent to 5,114; corn acreage increased by 20 per cent to 14,300; and soy beans increased from 1,241 to 1,907 acres.
So you can clearly see that the trend in the agriculture sector is toward increasing production, and that is an area that we have focused on in terms of the strategy for the department. But the agriculture sector is not without its challenges and I think it's important to put those before you today.
This sector is driven by technology, and we need to keep pace with the changing technology. Profit margins between production and markets are decreasing - there's a growing need for farm support; the issue of environmental concerns is ever-pressing; concerns about food safety, farm labour, farm debt; changing demographics is a challenge facing not just the agriculture sector, but the entire province - urbanization of rural areas is a challenge that I know John has mentioned many times; and environmental and increased
nuisance complaints are a challenge. So we set a stage in terms of agriculture: tremendous opportunity, tremendous challenges.
In terms of the fisheries, it faces many similar concerns. Nova Scotia continues to lead Canada in exports of fish and fish products. Last year it exceeded $1.2 billion - that's the fifth year in a row in which those numbers have increased. Export numbers are expected to continue to increase into the future. In 2000 our landed value was $648 million, while the stats for 2001 indicate $764 million - up over $100 million in one year. The U.S. market remains our prime destination for fish and seafood products, and this is followed closely by Japan, France, Denmark and the United Kingdom.
[5:15 p.m.]
Literally thousands of Nova Scotians are employed in the seafood processing industry. Aquaculture employs about 1,100 full- and part-time people. Our inland recreational fishery generates millions and helps support the tourism industry. In 2001, the provincial crab fishery had a landed value of $72 million, and the exports from this industry were valued at over $123 million. The offshore scallop fishery - the largest scallop fishery in Canada - in recent years annual landings ranged from 5,000 metric tonnes to 7,000 metric tonnes, with an estimated value of between $69 million and $112 million. Aquaculture, a sector that poses tremendous potential for this province, had product worth $37 million. The export value of lobster is in the neighbourhood of $338 million.
But the fisheries is not just about seafood/fish product. There's tremendous opportunity in the boatbuilding industry; the value of the boatbuilding industry has doubled in recent years. That industry returned in the neighbourhood of $60 million in 2001, but again, an industry with tremendous potential, but challenges - challenges that must be faced and faced in a non-partisan way.
As I said with agriculture, fisheries is concerned about helping new fishermen get into the industry - again, an area that was raised by a member in Question Period not that long ago. There are concerns about First Nations organizations, concerns about professionalization, the challenge of co-existence with the oil and gas sector, the downturn in the groundfishery, and there are issues related to water quality and access, snow crab and fair trade and challenge that's been of significant interest to me, the concerns of biosecurity and homeland security with our largest trading partner, the United States.
We've been moving forward on all these fronts. We've taken steps to address these challenges and we will continue to move in that direction. To support healthy Nova Scotians, we are doing several things. One initiative is the integrated food safety system directed by consumer safety. We've implemented an integrated food safety system - this initiative is aimed at minimizing the risk of food-borne illness and increase overall consumer confidence
in our food process. This will enhance Nova Scotia's profile as a producer of high-quality foods, in keeping with the objectives of the Agriculture Policy Framework.
Another initiative is the food in the schools program. The focus is healthy children in healthy communities. This is a community-based multi-stakeholder project designed to increase awareness of making healthy food choices, with an emphasis on healthy food choices produced and processed in Nova Scotia; in fact a successful pilot project was conducted in Oxford School in Cumberland County last year, and we will continue to promote this program in other schools in this province. This initiative also supports markets for local producers and processors.
We also want our sectors to be self-sufficient and prosperous. Through our fisheries enforcement strategy we will implement a strategy and initiatives directed at the illegal trade in fish and fish products. It's estimated that unreported cash sales total $200 million over the last three years. To put that in context in terms of what it means to Nova Scotian taxpayers, that translates into about $20 million in lost revenue for the province. To help combat that issue, the department has increased the number of inspectors from four to seven. But in a clear success story in terms of uploading, we're collaborating very closely with Canada Customs and Revenue Agency and the Department of Fisheries and Oceans to address this problem. These federal inspectors are all able to carry out inspections under our provincial legislation, and we're able to share that information better and more effectively; in fact, what that means is that we now have in excess of 120 people on the ground dealing with this problem.
There are trade issues with our enhanced snow crab processing sector. This sector has grown dramatically over the last five to six years, particularly in Cape Breton - the landed value of crab is about $84 million annually. Currently 1,100 to 1,300 jobs have been created in processing and that, just to put it in context, is up from about 200 to 300 in the early 1990s. But we still have challenges in that 40 per cent of the raw product is being exported from Nova Scotia to other provinces for processing, and this, in effect, means lost jobs here in this province.
Of particular concern to us are two provinces - Newfoundland and Quebec. They have provincial legislation which prevents the export of unprocessed crab from their provinces. That is a challenge, and it's a challenge that we've met head-on. The department is seeking to optimize opportunities for Nova Scotia's processing sector by advocating fair and open trade among the provinces, and we've also raised this issue with the federal minister and we're looking to have consistent seasons for harvesting of the resource to create a level playing field.
Beyond that, we're going to improve our animal health program. Nova Scotia will enhance its animal health program through improved disease prevention and biosecurity; this is part of an overall integrated food safety system which extends to meat inspection. We will
link to the federal program - the CFIA program - for biosecurity and animal health. We'll work towards bettering our recreational fishery and fish habitat through two agreements with the Department of Fisheries and Oceans, and one with recreational fisheries and one on fish habitat. Both are indicative of the improved working relationship between the province and DFO. Nova Scotia is particularly proud of the leadership role we have played and we look forward to further collaboration in the fisheries field.
The true key to success, in my mind's eye, involves trade. By creating strong trade and investment support we can assist both sectors in becoming stronger. Agriculture and fisheries together have over $1 billion in export sales, with combined landed, farm gate and processing values of over $2 billion. These, as I said earlier, are foundation industries and they are the key to a prosperous rural Nova Scotia.
We will address the changing face of agri-fish and sectors through the following means: We will create capital investment of over $50 million through the loan boards; we will target programs to increase trade capacity in these sectors and increase export sales; we will launch an investment plan to promote increased investment in these sectors; we will continue to invest in young farmers through the new entrance program, initiatives for industry to capture and develop new domestic and global opportunities included value added and diversification opportunities as well as new markets; we will continue to promote our winners, like Taste of Nova Scotia, to help build a brand recognition for Nova Scotia's food industry in key markets here at home and abroad - we are committed to quality, innovation and service; we will provide tools for industry players to better manage their own businesses; and we will create an integrated business resource system.
Perhaps one of the key components to success though is in stimulating a view of self-reliance. Self-reliance in industry, whether it's agriculture or fishery, through the provision of training opportunities, access to research and information and analysis. We want educated and confident Nova Scotians and we have programs that will allow this to happen. We support youth development and prosperity, and we will continue to deliver high-quality technical and professional education to the Nova Scotia Agricultural College as part of a post-secondary education system in this province. It's an institution that we should be very proud of - it will serve the needs of the agriculture and aquaculture industries. To put things in context, that institution provides $135,000 worth of scholarships every year to students at that institution.
A 2002 survey of former students indicated that 91 per cent of the graduates of the Nova Scotia Agricultural College had employment within six months of graduation. We recognize that we need skilled Nova Scotians for an environmentally responsible agriculture industry. The Nova Scotia Agricultural College works closely with the other Atlantic Provinces in delivering a Nutrient Management Planning Course. That program will continue over the next three years, and it's aimed at ensuring properly trained personnel to advise on the development of sound practices in the management of fertilizers and other nutrients
applied on agricultural lands. The Environmental Farm Planning Program supports our commitment to the environment.
Earlier I had mentioned the opportunity in boatbuilding. We will further the skilled labour for the boatbuilding sector. Boatbuilding in Nova Scotia has grown dramatically over the last few years - we've doubled production in the last five years. Today, the boatbuilding industry is worth $80 million and is creating tremendous employment opportunities in our coastal communities. To meet the skilled labour needs for this revitalized sector, the Nova Scotia Federation of Agriculture is working in partnership with the HRDC, the Department of Education, the Nova Scotia Community College, to develop a curriculum that will be available through the community college. In point of fact, as we stand today, Nova Scotia boatbuilding yards are actually having to turn work away because they do not have the skilled labour force to meet the need. These boats are very, very technologically driven. Materials, including composites and the highest-tech electronics, make boatbuilding a job for the future. Beyond that, there's tremendous opportunity for our shipbuilding sector in the U.S. market.
Our department's internal Water Task Force looks at water quality, access and quality issues across agriculture, fishing, and the aquaculture sector.
I will speak now about the Agriculture Policy Framework - one of the biggest opportunities that we have in our department and in this province is related to that. I will explain a bit about what the APF means to us and to the industry and how we see the programs fitting into the national program. To address the challenges facing our farmers, Nova Scotia is working with the federal government, other provinces and territorial governments to lay a foundation for a stronger agriculture and agri-foods sector for today and into the future. Through the Agriculture Policy Framework, governments are setting out a plan that will make Canada the world leader in food safety, quality, environmental responsibility, production and innovation.
In 2002, the Government of Canada and the Government of Nova Scotia signed a framework agreement on agriculture and agri-food for the 21st Century. This agreement shows a commitment of these governments to work together on development adjustment programs, services and tools to help producers succeed today and into the future. It also identified common goals that we will work towards over the next five years. There are five common elements of the policy framework - food safety, food quality, the environment renewal, science innovation and business risk management.
Canada's agriculture and agri-food sector enjoys a global reputation for producing consistent, safe, high-quality food. This reputation is due in large part to the commitment of Canadian producers and processors to put rigorous safety and quality control processes into practice. However, a good reputation today does not necessarily guarantee a good reputation tomorrow. Consumers are demanding greater assurances and more detailed information on the safety and quality of their food. International competition for food markets is getting
tougher. To build on a positive reputation, the Canadian agriculture and agri-food sector must continue to search out and make the most of new food safety, food quality processes, practices and technologies.
[5:30 p.m.]
Under the policy framework, Canada has committed to ensuring that food produced in this country continues to be among the safest and highest quality in the world. Specifically, the federal and provincial governments have agreed to work toward the following common goals on food safety and food quality: to protect human health by reducing exposure to hazards; to increase consumer confidence in the safety and quality of food produced in Canada; to increase the industry's ability to meet and exceed market requirements for food safety and food quality; and to provide value-added opportunities through proper food safety and food quality systems.
To achieve these goals the implementation agreement commits the federal and provincial governments to delivering a range of programs, services, and tools for producers. From a federal perspective, the Canadian On-Farm Food Safety Program will be extended and modified to help producers adopt the HACCP-based, Hazards Analysis and Critical Control Point Food Safety Program. HACCP is an internationally recognized system that provides a rigorous preventative approach to food safety. The Canadian Food Safety Adaptation Program will be restructured to encourage more participants among processors and distributors of different commodities. The existing program helps national associations and groups involved in the various phases of food production to support activities that improve safety through the process.
A traceability program will be introduced to help industry develop and implement a national tracking protocol and tracking systems through the agri-food chain. These systems will provide increased and more reliable information to industry members, thereby allowing them to quickly identify and address potential food safety and quality concerns anywhere in the production chain. A food quality program will be introduced to help industry put in place quality process control systems for the agriculture commodities and food and beverage products. Food safety and food quality incentive programs will further national food safety and quality program approaches by supporting a range of activities related to awareness, training, research and surveillance.
In the area of regulatory compliance, food and farm safety, our Nova Scotia food safety regulations will be amended to reflect national model regulations and projects related to implementing certain food safety measures will be supported. We have invested $369,000 in this initiative. Food safety program development and training will be provided for formal certification of agency consultants and to enhance the industry's adaption and adoption of food safety systems, and to this end we will invest $205,000.
In the area of the environment, farmers depend on the natural environment to deliver the essentials for successful production year after year, therefore the long-term prosperity of this sector is linked to the ability to operate in a natural environment in a sustainable fashion. Governments and producers understand this concept well and are working together to enhance the ability of the agriculture and agri-food sector to better understand the environment and operate in a responsible manner. Environmental responsibility in terms of production means adapting to practices that protect the air, water, soil quality, and promote conservation for living things.
Under the Agriculture Policy Framework, governments and farmers will further their work on environmentally responsible production and will show that Canada is a leader in this area. The federal and provincial governments have agreed to the following goals: reduce agricultural risks and provide benefits of health and supply of water, with key priority areas being nutrients, pathogens, pesticides and water conservation; reduce agricultural risks and provide benefits of health of soil with key priority areas being soil organic matter, soil erosion caused by water, wind or tillage; reduce agricultural risk and provide benefits to health of air and atmosphere with the key priority areas being particulate emissions, odours and emissions of gasses that contribute to global warming; and ensure compatibility between biodiversity and agriculture with the key priority areas being habitat availability, species at risk, and economic damage to agriculture from wildlife.
To work towards these goals, the implementation agreement commits the federal and provincial governments to delivering a range of programs, services and tools for producers. The federal program will support and assist producers in the development and implementation of environmental farm plans. These plans will help farmers increase their understanding of the environment, assess potential risks and benefits of their operation, and identify actions to move forward from their findings. An incentive program will be established to accelerate the adoption of environmentally beneficial actions stemming from these plans. An enhanced environmental farm plan initiative will build on existing national and provincial farm planning programs in a number of areas, and will develop and implement a nutrient management program. We have invested almost $2.5 million in this program, and we will continue to do so.
Producers are operating in an environment that is increasingly knowledge-sensitive. They compete to sell our commodities in a complex international marketplace, and they are required to stay on top of advances in science, technology, business practices and production techniques. To take advantage of emerging opportunities, producers must be able to improve and update their skills and to put innovative practices and technologies to work. Government has agreed to work with producers to ensure they have access to the learning and development opportunities they need.
Under the APF, the federal and provincial governments have agreed to the following renewal goals for farmers: to increase their profitability; to enable them to make choices about sources of income; to help them meet market and consumer demands respecting food safety and food quality and environmentally-responsible production; and to help capture opportunities created through science and innovation.
To work towards these goals, the implementation agreement commits the federal and provincial governments to delivering a range of programs, services and tools for producers. The Canadian Farm Business Advisory Services will provide farmers with access to renewal programs and services. This network of advisors will offer farm business management counselling and assistance, and this will make the most of opportunities stemming from advances in science and innovation, and in making business decisions and by accessing capital. A skills development initiative will support the identification of the skills needed by farmers, as well as the development and delivery of training courses that will work in collaboration with provinces and partners to help farmers improve their management skills.
An Agriculture Enterprise program will offer farm operators or their spouses on-farm skill development and training, as well as other training and career counselling that will improve the profitability of the farm and increase income opportunities through new business opportunities and employment. A new opportunities business development and investment initiative will provide business development and economic analysis within a framework respecting existing national and provincial programs. Through the initiatives there will be enhanced economic analysis of the industry development opportunities for Nova Scotia to support the identification of viable business development opportunities and, to this end, we will invest $1.5 million.
The future success of Canada's agriculture and agri-food sector will depend in large part on its ability to be at the forefront of science and innovation activities. To foster science and innovative activity in Canada's agriculture and agri-food sector under the APF, the federal and provincial governments have agreed to the following common goals: realigning public science resources, coordinating among the whole value chain and creating an innovation climate. To work toward these goals, the implementation agreement commits the federal and provincial governments to delivering a number of programs, services and tools to producers.
The overarching program for science and innovation will focus on the strategic development of science and innovation. This will include a benchmark study of current levels of science and innovation investment that has been undertaken in 2003-04. A realignment action plan will be developed later in the year to make adjustments that will increase the effectiveness of these investments. A strategy will be developed to increase investment and the resulting returns in Canada's bio-based economy by 2005-06.
In Nova Scotia we will invest $500,000 in technology research training initiatives to enhance research and development capacity by supporting graduate-level research training and providing research support in areas related to the policy framework.
Canada agriculture and agri-food sector enjoys a positive image abroad and this is being recognized - the success has helped Canada to become the world's third-largest exporter of agriculture and food products. Programs and services and tools supported under the APF will help producers achieve real improvements in food safety and food quality, environment renewal, science and innovation. These improvements will provide the basis for continued work on positioning Canada's agriculture and agri-food sector as a world leader and for strengthening our position in global markets.
Governments will work together to increase international opportunities in recognition of the sector for branding of Canadian agriculture and agri-food sector and fostering market opportunities. Work on trade issues will also be strengthened to obtain better access for Canadian products by reducing traditional barriers and overcoming new technical barriers. Governments will work with the sector on a regular basis through value chain round tables to facilitate the development of marketing and branding strategies, and to help establish priorities to ensure that the details of government policy support expanding markets abroad.
I would like to take a few moments now to talk specifically about the department's structure. Agriculture and Fisheries promotes, supports, and develops the agriculture and fishing industries. The department is structured to service the needs of sectors consisting of four service areas - centralized Policy/Planning & Communications division and the Nova Scotia Agricultural College.
More specifically, the strategic goals for 2003-04 are as follows: to achieve a sustainable and environmentally responsible development for Nova Scotia's agricultural and fishing industries; to create a competitive business climate that encourages economic growth and increases jobs in Nova Scotia's rural and coastal communities; to assist in the orderly development of agriculture, aquaculture and fisheries through a regulatory regime which supports business and sector growth and development, and which encourages consumer confidence in food safety; to allow Nova Scotia to be globally competitive through its workforce, through education, training, research and community services; and to continue to be accountable for the public services that we provide.
In terms of our core business, sustainable resource management balances industry development with environmental and social responsibility through applied research, technology transfer, and generally accepted management practices, and industry public awareness. Departmental activities in the core businesses are designed to move our agricultural and fishing industries closer to a state where the three principles of sustainability, economic viability, and environmentally sound and socially accepted practices are in balance.
In order to get there, the department will work with industry to promote standards of environmental stewardship among business operators. The department will also work to ensure that freshwater fish stocks and habitat are well managed and sufficiently protected, so that anglers and nature lovers can continue to enjoy Nova Scotia's natural beauty. Education will be the key to raising the industry's awareness of environmental issues and the public's appreciation of the resource sectors. Together these efforts will help to sustain prosperity in agriculture, aquaculture, the fishery, and secure the future of communities that rely on these industries.
Major programs that are available: Agriculture Resource Stewardship and Advisory Services, including agriculture field services, land protection, integrated pest management; Environmental Farm Planning through soil, nutrient and manure management; AgraPoint, an alternative mechanism for delivering extension advisory services to the agriculture sector; Water Resource Management for agriculture, aquaculture and the fishery sector; Aquaculture Development and Extension Services; Inland Fisheries and Resource Management; Marine Advisory services, Field Services; and Coastal Zone Management.
In 2003-04, we will accelerate the Environmental Farm Planning Program. We will apply climate change research - that has been underway at the Nova Scotia Agricultural College - to the farm level by encouraging the adoption of new technologies and best practices aimed at meeting the targets of greenhouse gas reduction; implement the Environmental Monitoring Program, for the aquaculture sector, in conjunction with the Aquaculture Association of Nova Scotia; and develop a new National Aquatic Animal Health Program for the aquaculture sector.
[5:45 p.m.]
Industry growth and development focuses on Nova Scotia's rural and coastal communities by investing in industry stability, new economic opportunities and strategic development partnerships. Today's business climate is highly dramatic and increasingly globalized. Industry needs to be responsive to global trends in order to remain competitive. Nova Scotia's agriculture and fisheries industries have been evolving and adapting to broader trends, moving from a focus on primary production to increased diversity in primary production, value add, greater export value, and a strong base in scientific research and technology and innovation.
Programs and services in this core business area are designed to assist Nova Scotia's agriculture and fishing industries to compete effectively in a highly competitive and global marketplace. The department assists industry in seizing opportunities to innovate, diversify, add value and improve the quality of their products. Tourism is important in Nova Scotia and the department is enhancing the sport fishing sector and looking at new opportunities for agri/aqua tourism. At the same time, the department recognizes the importance of stability
in the business environment so the industry can manage risks and carry out long-term planning.
Major program activities include: integrated risk management programs; support for income stabilization in the agriculture sector; sector investment, including credit and financing services; industry development, including development of a new commercial fishery marketing and trade services; product development and quality evaluation, including value-added production; and business management and economic analysis, as well as freshwater fish stocking.
In 2003-04, we will partner to implement strategies that increase public awareness and appreciation of agriculture, aquaculture and the fisheries, including the Brand Nova Scotia initiative, Taste of Nova Scotia Programs, the Annual Aquaculture Harvest Festival, 4-H and agriculture awareness activities. We will continue to engage in sustainable community initiatives from coastal and rural communities through our regional field services, we will work to develop a strategic plan focused on economic growth, and we will continue to advocate for our fair share of the marine resources for Nova Scotia.
We will work with governments at all levels, and industry partners, to implement strategies aimed at the development of value add. We will pursue new opportunities for expanded snow crab processing in Cape Breton and aquaculture development in Guysborough County; we will implement a new business strategy for Agri-Tech Park, positioning this facility as a bio-economy village focused on the environment, food safety, and science and innovation; we will continue the life science research at the Nova Scotia Agricultural College in the development of new, functional foods; and we will advance the Brand Nova Scotia initiative, which will include building on the Taste of Nova Scotia success and implementation of six pilot projects.
We will continue development and implementation of the federal-provincial market and trade strategies with industry stakeholders, targeting the northeast U.S., the European Union, Japan and China. We will continue to build on the success of the Nova Scotia boatbuilding industry and increase export sales. We will implement the new investment plan for Nova Scotia's agri-food and fisheries sector. We will continue to provide lending services through the Farm Loan Board and the Fisheries and Aquaculture Loan Board, and implement an enhanced financial management system for these two boards. We will continue the New Entrants Program for the agricultural loan program. We will implement the new market opportunity and loan program for beef and the Nova Scotia tree fruit industry, aimed at revitalizing these sectors.
Responsible government focuses on the orderly development of an industry through supportive legislation and regulatory framework, including licensing and leasing for developmental operations. The department's efforts in this core business area are directed at developing a legislative regulatory environment that supports business, protects consumers
and minimizes the impacts on the environment from resource development activity. To achieve this long-term goal, the department ensures that the legislation and regulations enable business development, that they are consistent and they treat businesses equitably, and that they are not unnecessarily burdensome for the business operators.
An effective regulatory climate must also protect consumers and help to ensure safe food. To this end the department supports better product labelling traceability, and the adoption of recognized standards of food quality, and issuing aimed at promoting proper food handling will minimize the risk of food-borne illness, and increase customer confidence in commercial food establishments among the general public.
Illegal fishing activities undermine the livelihood of legitimate commercial fish harvesters and the department will continue to work with federal partners to address this pressing issue, department licences and leases activities in the aquaculture development and marine harvesting. Major programs and activities include the enforcement of regulations, governing licensed operations and mandated activities, legislative and informative management services, licensing of fish plants and buyers of retail food outlets and restaurants, issuance of agricultural permits, and licences for fur and game farms and farm registration, licensing and management of marine plants, aquaculture licensing and leasing and coordination of the regulating of the market boards for the agriculture sector, evaluation of food quality and safety, and prevention of animal health and disease.
We will focus on an integrated food safety program to provide a quality evaluation service for industry in the areas of product standards, food safety, education and research, and analytical testing. To do this we will assist with the implementation of the food safety pillar of the Agriculture Policy Framework agreement aimed at enhancing industry compliance with standards and best practices. In 2003-04 the department will continue to implement recommendations of the Red Tape Reduction regulatory review process. We will continue with streamlining and transitioning of the regulatory responsibilities included under the Dairy Industry Act, the Natural Products Act, the Crop and Livestock Insurance Act. We will complete a review of fisheries and coastal resource Act and regulation; implement a revised fish processor and fish buyer licence policy, including internal improvements to support new policy; implement a new fisheries enforcement strategy to address illegal fishing, buying and selling activities, which includes a collaboration with the federal and provincial agencies; and increase staffing and training.
Life-Long Learning focuses on sustaining expertise and excellence in Nova Scotia's agricultural, agri-food and aquaculture industries in preparing Nova Scotians for a global labour market through teaching, research and community services. The department, through the Nova Scotia Agricultural College, offers a broad range of post-secondary educational programs, training and research for the agriculture and aquaculture industries. The Nova Scotia Agricultural College is the centre of agriculture research innovation for the entire Atlantic Region.
Four focus areas for academic and applied research include: climate change; organic farming; product quality enhancement; water quality and resource management; and soil and farm waste management. The NSAC is unique in its work on bio-products, potato, blueberry, carrot for animals - mink in particular - which it conducts in partnership with the private sector. These and other activities are vital for the sustained growth of our agriculture/aquaculture sectors. The 4H program focuses on agricultural awareness and provides rural youth with leadership and other lifelong skill development. We will increase NSAC's research capacity in 2003-04 by establishing new research positions in aquaculture, nutrition, organic farming and fruit by-product development. Implementing a new Canada Research Chair in Agriculture Resource Management is part of the Canada Research Chair's program. Implementing the technology in research training initiative under the APF is aimed at increasing the long-term innovative capacity of Nova Scotia's agri-food sector. This will be achieved through the NSAC by training high-quality personnel at the graduate level.
We will seek opportunities for further diversification in the curriculum to respond to new opportunities in life science, environmental engineering, biology, agriculture, business, new and value-added product development in aquaculture. NSAC will review and revise where appropriate, the academic and continued education programs to ensure that these programs meet the needs of the students and their prospective employers. Through the department's 4H program, Nova Scotia youth are provided with opportunities to develop leadership skills and other lifelong learning skills.
The 2003-04 budget for the Department of Agriculture and Fisheries will see programs and the delivery enhanced in 2003-04 with very little financial impact. There is a net increase of $845,000 in the department's 2003-04 budget. We have a $40.1 million operating budget and I look forward over the next few hours of talking specifically about those areas.
MR. CHAIRMAN: Thank you very much, Mr. Minister. Just to alert you and your senior staff that if there are any requests for information that it is to be brought forward to this committee through the discussions here, I ask you to provide a copy to myself as chairman of the committee as well as to each of the three caucuses, to be sent forthwith when requested and when ready so all three caucuses receive the information at the same time. Is that understood? Thank you very much.
The time now is for questions from our Opposition and Third Party, so I will ask that the NDP have an opportunity to start first.
The honourable member for Hants East, your time is 5:55 p.m.
MR. JOHN MACDONELL: Mr. Chairman, I just want to get some clarification from the minister. It's my understanding that we're asking you about agriculture and fisheries?
MR. BALSER: Right.
MR. MACDONELL: Both parts of that department?
MR. CHAIRMAN: You can ask him any of those things, also harness racing as well as the Public Service Commission. We're doing the minister at one time. Are there any statements you wish to read in regard to that?
MR. BALSER: Just in terms of that, I had discussions with the Opposition Party that indicated from a point of management it would be appropriate to deal with Agriculture and Fisheries as a block, and then at the appropriate time replace the support staff with those related to, whether it's the Public Service Commission or Sysco, so it simply means that those people would be able to continue with their day-to-day work and at the appropriate time be replaced.
MR. MACDONELL: That's fine, thank you, Mr. Minister. I want to congratulate you on your new responsibilities. I think I envy you, as I see agriculture as an area that can generate wealth in rural Nova Scotia. It can help sustain communities and, as well, the fishery. I think that perhaps you have one of the more challenging portfolios and I certainly hope you will take full advantage. This is an area that I think some small investment in agriculture and fisheries would save the government money in the long run in trying to sustain those communities, so I certainly hope that the government will look at that as a vehicle that actually can have a lot of positive returns for the people of Nova Scotia and, in particular, in rural communities. I also want to thank your staff for their efforts in being here today.
A few questions right off the top, I guess, out of the Supplementary Detail, Page 3.6, and I'm looking at Agriculture and Fisheries Loan Boards, that line item under Net Program Expenses. In looking at 2002-03 Estimate and Forecast, the Estimate is $5.65 million to $1.669 million and then to the Estimate, 2003-04, it is $1.7 million roughly, but if you look at the previous years, 2001-02, it was $6.9 million and the Actual went up to $8.5 million, which is significant compared to the Estimate for 2002-03 which is the $5.5 million and the Forecast is about $1.5 million, maybe pushing $1.75 million. So I want to ask the minister what's going on?
In the Estimates Book, Province of Nova Scotia, on Page 1.11, if we look at Additional Advances and Investments, Fisheries Development Fund and the Nova Scotia Farm Loan Board, I think if what I have read is right, these have a maximum level of $25 million in loans that they can give out - I believe that's right - under the Agriculture and Fisheries Loan Boards, why is the number so low in the forecast?
MR. BALSER: The simple answer would be that it's related to the loss provision that was completed in 2001-02, the $4 million estimate for the new opportunities program; it's related to that. Generally speaking though, to put things in context in terms of the Loan Board itself, that has been very, very well managed in terms of its ability to provide support to the industry and at the same time protect taxpayers' dollars. If you look at the way in which it has been managed and it's very, very effectively managed and in fact is a true success story, so there's not anything untoward in that, it's just related to some of the issues that have been faced in the industry related to unusual difficulties.
MR. MACDONELL: Did you say a new opportunities program was the reason? Are you saying that that program ceased or a loss loan provision or . . .
MR. BALSER: I'm saying the weather-related loss provision programs was completed in 2001-02 and the $4 million estimate for the new program, opportunities in 2002-03, is a forecast for expenditures under the Agriculture Services program.
MR. MACDONELL: Where is Agricultural Services, where would I find that? So has the Agricultural Services' budget gone up by $4 million?
MR. BALSER: Yes.
MR. MACDONELL: It has gone up by $4 million?
MR. BALSER: Yes.
MR. MACDONELL: Is that where AgraPoint funding is, because I can't find that. What line item would that be in?
MR. BALSER: That's on Page 3.4 under Senior Management, Grants.
[6:00 p.m.]
MR. MACDONELL: Oh yes, under Grants, okay. Well, that looks pretty low, is that $206,000? Where did you say that $4 million was, what line item?
MR. BALSER: We'll just check that. On Page 3.5, under Agricultural Services there is an amount for Administration, $3.294 million - that would be included there.
MR. MACDONELL: Is that the number we were talking about in my previous question about the Farm Loan Board, where you said there was $4 million - what was that line item?
MR. BALSER: When we're looking at the $3.294 million as related to AgraPoint, you had two questions . . .
MR. MACDONELL: Okay. That's where the amount for AgraPoint is. How is it that that number is $1 million down from the 2002-03 forecast? It was $4.294 million and now it's $3.294 million.
MR. BALSER: In answer to your question, the budget for safety net programs was an increase of $36,800 due to a reduction in the efficiency gains, and $100,500 due to a 3 per cent salary increase. A recovery was added for a one-time adjustment to the department's reserves of $790,000, and those amortization costs were distributed to the correct costs centres, so they readjusted the $790,000. There was a $1,000 budget transfer from Transportation and Public Works related to the trunk mobile radio system. So it's a net of that.
MR. MACDONELL: Okay, so the question, back on the Farm Loan Board, you mentioned where that line item went and I didn't get it, at least I didn't get to make note on it.
MR. BALSER: There was $4 million transferred from the Industry Development & Business Services branch, previously for the Loan Provision Program to the Agriculture Policy Framework program.
MR. MACDONELL: Where is the Agriculture Policy Framework Program, where would I find it?
MR. BALSER: Okay, it would be included in Page 3.5, under Agriculture Services, in the Programs and Risk Management section. You will notice 2002-03, 2003-04, the Estimate to Estimate increased by roughly $4 million.
MR. MACDONELL: I'm not seeing it.
MR. BALSER: On Page 3.5. It's $6.6 million to $11.1 million.
MR. MACDONELL: So, that's down $1 million. What's the reason?
MR. BALSER: As I just indicated, the readjustment of the $790,000, approximately, and the trunk mobile radio, those issues, it works out roughly to $1 million.
MR. MACDONELL: And that was from the Department of Transportation and Public Works?
MR. BALSER: The trunk radio was.
MR. MACDONELL: A question on the Estimates Book, Page 1.11. The Fisheries Development Fund and the Nova Scotia Farm Loan Board, are those limits of $25 million?
MR. BALSER: Where are you looking?
MR. MACDONELL: Page 1.11.
MR. BALSER: There has been no net change in the Fisheries Development Fund that I can see, it stays $25 million across the board. The other one you were looking at was the . . .
MR. MACDONELL: The other one, for the Nova Scotia Farm Loan Board there is a drop of about $700,000 . . .
MR. BALSER: In Estimate to Estimate it's $28 million to $25 million.
MR. MACDONELL: It was $28 million to $21 million, and then for 2003-04 the Estimate . . .
MR. BALSER: But the $28 million to $21 million has been generated through internal savings and perhaps underutilization of the fund in terms of Estimate to Estimate, which is where we need to look, I think, $3,000 change.
In terms of this, the Actual for 2001-02 and the Forecast for 2002-03 is below the Estimate because of the high fee revenue arising from early loan repayments, in response to unusually low short-term interest rates in comparison to the longer-term rates as offered by the board. The fee revenue is expected to drop as short- and long-term interest rates return to the historical relationship. So it's just a reflection of the changes in the money markets as much as anything.
MR. MACDONELL: In the Supplementary Detail, Page 3.5, under Net Program Expenses, Agriculture Services, the Administration, $3.294 million - you said the $2.2 million for AgraPoint was on that line item. I'm curious, it's down $1 million, so what's happening with that, in Administration, there? Did you cut staff or . . .
MR. BALSER: The simple answer would be that you're basically talking about the $790,000 adjustment, beyond that if you look at Administration for example, there have been some savings there just through the staffing and related issues and reduced travel and so on. Generally, the big ticket item would be the $790,000 one-time adjustment, that's where it came from.
MR. MACDONELL: I have some questions around some of the comments out of your speech. I'm curious, the Food Safety Program, I'm wondering what is that?
MR. BALSER: Basically it's the CFIA program that has been introduced that would look to ensuring that food safety standards are met both in terms of production and in terms of the sale through retail outlets, and part of the mandate of the inspectors is to ensure that quality programs are in place, that companies that are involved have in fact the regime and the documentation. A lot of what the food inspection people do in terms of plant operations is simply audit books to ensure that there are proper monitoring and control mechanisms in place.
In fact, just prior to coming here today, I was spending some time in Shelburne County at some of the processing operations there, at Clearwater, their scallop and crab processing plant, and was talking specifically about that, that by and large the inspector's role is to ensure that they have in place the proper regime to ensure that documents are in place. On a national scale, part of the growing concern, particularly as we export to the U.S., is related to the implementation of the Bioterrorism Act and the Homeland Security Act. So they're looking to ensure that we can demonstrate through word and deed that we have those kinds of programs in place.
MR. MACDONELL: I'm curious, as far as food, anything being exported to the U.S., does that come under federal jurisdiction at all or is that all purely provincial?
MR. BALSER: It's a bit of both. It's my understanding that part of the Agriculture Policy Framework, specifically agriculture, has dealt with how do we ensure that the federal regulatory regime is mirrored by the provincial regulatory regime. As we move forward, one of the things that we've done fairly effectively, I believe, particularly on the fishery side in terms of inspections, and we have been able to work with DFO to have those people carry out inspections for us, so that we have, in fact as I said in my opening comments, we can boast that we have 120 people on the inspection side of things related to fisheries - DFO, federally, are involved and our inspectors are involved, so there are federal regulations that overlap the provincial regulations.
MR. MACDONELL: How many inspectors for food safety does the province have on staff?
MR. BALSER: We have 22, in terms of food inspection.
MR. MACDONELL: And the federal counterparts to those would be how many?
MR. BALSER: I would have to take that under advisement. We do have, in terms of meat inspection, 14 people who are involved in the meat inspection side from the provincial prospective. We will get you the actual number.
MR. MACDONELL: Is there still a milk program in schools?
[6:15 p.m.]
MR. BALSER: Yes, there is. That funding was secured in the budget, I believe, to the tune of $400,000.
MR. MACDONELL: Has there been any notion or movement toward, or any examination, and I mean on the nutritional side, as I know some dairy producers would like to see chocolate milk offered in schools more and less pop, soft drinks, and so on, has the department ever done anything to determine, around the nutritional value - I would think milk would be more nutritional than soft drinks so . . .
MR. BALSER: It's interesting you should ask that, because I have had some discussions with the dairy producers about that very issue and how best to move forward. The simple fact is that from the dairy production side of things, if they want to be competitive - and it is a competitive world - they will have to put together a program that would appeal to the school system, either at the board level - and interestingly enough, a conversation I had with representatives was related to how we have - I guess the argument would be - a vending machine that would supply milk products. If you're looking at some of the competition, whether it's Coke or Pepsi, they promote school athletic programs, and it will take an orchestrated effort on the part of the industry to position themselves to do that. If you visit some of the high schools, they will have a score clock that's been provided by one of the companies, Pepsi, Coke, whoever.
The suggestion I made to the dairy industry was that if you're serious about this, you have Farmers and Baxters and some of the other producers, that you need to focus on how do we market our product. Certainly from a provincial perspective, we would support those kinds of programs notionally, but again it's a decision to be made by the board and perhaps the school principal, and in some instances it depends on if a board has a policy related to that, then they would have to deal with it at the board level; if it's a school-based policy sometimes it's simply a matter of talking to the school administration, saying if you were to allow us to put a vending machine in or put our product in the school we are prepared to do this in exchange.
That was the limit of the conversation I had, so notionally there's a compelling argument to be made that milk and milk products are nutritionally better than pop, but at the end of the day if the school needs a score clock, if you will, and that's the trade-off, then the industry has to be prepared to enter into those discussions as well, because it is a business decision to a degree.
MR. CHAIRMAN: I have been advised by Leg TV, they are asking members, when asking and answering questions, to speak closer to the mike. We're having difficulties picking you up for the Hansard record.
MR. MACDONELL: I have to say that probably shows a difference in philosophy, because I'm not sure I like the notion of corporations coming into the schools or schools approaching corporations to get their product into the school. I think it should be determined whether or not milk is actually a healthy thing for students to be drinking, or healthier than pop, and some decision made around that, whether we're actually doing them any service to let them have access there in an educational institution, and school boards and the funding of boards is the responsibility of the government.
Along with that, we have legislation around creating the marketing board, Dairy Farmers of Nova Scotia, we don't have legislation around creating pop sales outlets or anything in that regard unless it's around safety issues or labour laws and how they treat their employees, so I think that this is a somewhat different proposal than just leaving them out in the competitive world. I think we should seriously look at whether or not our school boards are funded properly, and that would take away the issue of whether or not if they need a scoreboard they have to have somebody provide that as long as they can get their product in the school.
I taught school for 15 years and I think of this as a case where I learned my lesson. I'm not even struck on fundraisers using chocolate bars and so on; I don't necessarily see them as a healthy product and it strikes me as using children to market products for these corporations is not really the right lesson to be teaching kids. With that being said, I am glad that somebody is talking to you on the chocolate milk issue. I think the access for them could be made easier than it is, and I think there's probably good reason for that unless somebody could tell me that nutritionally this is not a good thing for them to be consuming.
MR. BALSER: Can I respond? Just in terms of that, a couple of things, I guess. There is the School Milk Program, which is a significant investment from the province to support that activity. The other piece of it simply is that at some level it's a board- or a school-based decision, as I said, if the principal of the school - the fact that I also was an educator and I saw many initiatives brought forward by the dairy industry to try to promote the consumption of milk products, whether it was T-shirts or prizes and so on. Your point about the nutritional value of milk versus soft drinks is a real one, but having said that, at the end of the day consumers make choices and we live in a world where we're inundated by marketing and I think it would be naive of the industry to say that we can legislate or we can force consumption of a product, however good it might be. I think there's two pieces to that - the milk program is a good program and your points are well taken.
MR. MACDONELL: Well if you told me we're not going to allow pop in schools because we don't think it's a healthy product for children, I would say probably common sense will prevail on that, I would agree with you. If they want to go to the supermarket and buy it, then I would say that's where free choice and marketing comes into play, but what's presented to our children in schools, I think that's where government has a responsibility to
determine whether or not that's a good thing to have there. I think you do have a little more authority in a taxpayer-run facility as to what the benefit is for the children who are there.
I might try to get as many of my fishing questions out of the way, because I don't want to keep jumping back and forth. You mentioned about the crab industry - worth $80 million landed, 1,100 to 1,300 jobs in that sector, and 40 per cent of the crab is being exported, along with the jobs. I'm curious, you mentioned Newfoundland and Quebec and their legislation for processing and I've heard arguments around NAFTA and our interprovincial agreements where they were grandfathered because they had some legislation in this regard, that anything landed there would have to be processed there. I'm wondering what the province is doing in this regard. It's my understanding that there's a committee that has been formed and you've been looking at the possibility of attaching conditions to licences, where are you with that?
MR. BALSER: The issue is significant. You're well aware that last year there were challenges in terms of unprocessed crab leaving the province. Obviously we don't want to see those jobs leave the province, but if you compare - Nova Scotia is a free-trading region, we believe very strongly in that - our economic performance to some of our sister jurisdictions, there's no question that Nova Scotia's economy has been stronger, and I believe it's a result of the fact that we do support free trade. Because Newfoundland and Quebec have specific legislation, we challenge them in terms of a letter to buyers that we feel that's an unfair trade practice. That's the same issue - not so much the same issue, but certainly New Brunswick was involved in that issue and I had meetings with my counterpart from New Brunswick and we have an understanding with that province that they are willing to participate as free traders. The bulk of the crab that was leaving the province unprocessed was going to New Brunswick.
Just last week I had a meeting with the processors and talked to them about how they see this thing unfolding. It creates significant challenges that begin to invoke countervail or a protectionist trade policy to deal with the problem. Clearly Newfoundland has made a decision - and I don't know if it was founded in economic or politics, but it has created challenges. I'm reasonably confident that we'll be able to work our way through this, particularly if New Brunswick has been able to respond in a positive manner so that removes a big piece of the problem if you will.
At the end of the day I think the harvesters want a fair price and processors need access to product. There are clearly plants that didn't have that opportunity last year. There are lots of variables. We have a challenge in terms of the timing of the seasons. We've been speaking to the federal minister about trying to level the playing field. You have a challenge right now in terms of some jurisdictions having access to crab earlier on. We have in our province some crab harvesters who are also lobster fishermen and they prefer to finish up the lobster season before they convert, so there are many factors involved in this and we have been working closely. The committee has been very, very active through the winter months.
You never say it's over until it's over, but obviously Nova Scotia recognizes that we need to keep as much opportunity at home as possible. Short of saying that we've dealt with the problem, we're continuing to work with our counterparts in the other provinces trying to resolve this.
MR. MACDONELL: I don't know if you answered my question. I guess what I'd like to know is are you going to impose any restrictions on licences?
MR. BALSER: The wording of the letter reflected that we would look at that option. That is something that the province has available to it to deal with this problem. Clearly what we would like to have happen is the provinces recognize that at the end of the day, free trade is in everyone's best interest. The season is not upon us as yet and we've had a number of conversations in terms of what it appears the prices will be like. The letter clearly indicated that at the end of the day we would look at invoking sanctions as a means to deal with the problem between Quebec and Newfoundland.
We were able to resolve our issues with New Brunswick positively, I believe, at this juncture without resorting to that, but that's one of the arrows in the quiver if you will. When you go down that road and you begin to pile countervail on countervail, who wins?
MR. MACDONELL: I think "quiver" is the key word here - that's what I'm starting to do. Do you have any assurance from New Brunswick, is New Brunswick telling you we're not going to come down and buy your crab? Or what, do you have anything in writing? Do you have something signed? Naturally, we're free traders and I'm not necessarily sure that free means fair, so what have your talks with New Brunswick really come up with?
MR. BALSER: They have led to agreement that the market is open and if you pay a price for the crab, then you will be able to access that crab. So in theory, if Nova Scotia processors pay a price that's competitive, they will have access to the crab in the same way that New Brunswick processors, if they wish to buy crab in Nova Scotia, would have that opportunity as well. It's a function of being able to trade freely, as opposed to Newfoundland and Quebec who have simply said unprocessed crab won't leave our province. What this will hopefully do is create a market competition that will cause the price to reach a fair market price and processors in Nova Scotia will have access to crab in New Brunswick and New Brunswick processors in theory would have access to crab in Nova Scotia and the price would determine who gets what.
[6:30 p.m.]
MR. MACDONELL: That sounds like the situation we have right now, that price determines who gets what because it's obvious that people in New Brunswick are paying more for crab and the crab is going there and in the case of Newfoundland, they're paying more because their season is earlier. They've already made their money so they have a much
greater margin on which to work than the plants in this area that are just starting into their season. So I don't really get a clear message from you that anything has really changed in all this discussion.
MR. BALSER: I don't know, what we clearly indicated to Newfoundland and Quebec, is that we're looking at the options to deal with the fact that they don't allow unprocessed crab to leave the province. So they have been able to buy in Nova Scotia without reciprocal arrangements. So we have indicated by letter that we're looking at what options are available to us and we will pursue those options based on what situations unfold.
In terms of New Brunswick, by creating a situation where they have agreed that their buyers will allow Nova Scotia buyers to buy crab in New Brunswick and vice versa, that was not the situation last year, and so now we have open trade. So a producer in Cape Breton, or in Shelburne County, or wherever, would be able to go to a harvester in New Brunswick and bid for that crab through a broker and one would assume that if they bid a cent and a half or 2 cents higher, then they will get it and vice versa. So it will become a competitive market which at the end of the day should benefit certainly the harvesters.
MR. MACDONELL: So why couldn't this have happened last year? If this is free trade, why is it that - my understanding is that New Brunswick wouldn't allow this to happen. Is that what you're telling me? (Interruption) Then how were they able to do this under free trade?
MR. BALSER: Because last year we did not have the understanding that we have arrived at through our discussions.
MR. MACDONELL: How did we get to a free trade understanding if we didn't have this as part of the understanding?
MR. BALSER: Because last year there was a different situation. So to deal with the problem that occurred last year, the committee looked at what options were available. As I said, I had discussions with my counterpart. Staff had discussions with their counterpart in New Brunswick. There were some challenges on the table. We were able to resolve those challenges to the satisfaction of New Brunswick and Nova Scotia. So they said in light of the fact that free trade is in the best interests of both parties, we're prepared to allow buyers from Nova Scotia to speak to our harvesters in New Brunswick in the same way that we would do. So what we've done is we've negotiated a settlement related to the problem that existed.
MR. MACDONELL: Well, it sounds to me like you negotiated free trade, you know, another component of the free trade agreement. So if they're prepared to allow it, what's to stop them from not being prepared to allow it? I mean what do you have in writing? Is this a signed agreement?
MR. BALSER: We're in the process of exchanging correspondence related to that. We had a verbal agreement as a result of the meeting here in Halifax where my staff and I met with the minister from New Brunswick and his staff. We spoke specifically to the issues of concern from New Brunswick's perspective. Nova Scotia put its issues on the table. We acknowledge that in the grander scheme of things, retaliatory trade sanctions were not in our best interests and at this juncture letters are being exchanged or are in the process of being exchanged and we're satisfied that that problem has been resolved.
MR. MACDONELL: So this verbal agreement, is this something like the agreement around the Laurentian sub-basin?
MR. BALSER: Not at all. As I've said, we have exchanged correspondence and we have every confidence, the view, the future in this situation having been resolved. Now, no one will know until the opening of the crab season and so on but, obviously, provinces have to come to some resolution in terms. If you want to draw the Laurentian sub-basin issue, that was obviously a legal decision based on a judicial review. So we put our best cards on the table, they put their best cards on the table and the judges and the arbitrators made a decision. That's as fair as it gets.
MR. MACDONELL: I was talking about pre-judicial decisions, you know, when it was supposed to be a verbal agreement. So in previous free trade talks with the provinces, and I'm not sure when those would have occurred, then this issue around the sale of crab, and possibly many other commodities, fish product, agriculture, et cetera, that this wasn't something that would be recognized that there be a free market in the buying and selling of crab at that time? I mean why is it that we have to sit down and talk to these people this time and threaten them with some kind of trade sanction? I guess what I'm saying, what's in the agreement and are they breaching the agreement? That's what I'm saying. Is New Brunswick breaching the free trade agreement as we understand it?
MR. BALSER: Potentially, and obviously trade relationships are challenged constantly. In the time that I've been involved in government, initially as Minister of Economic Development, we were involved in attempting to resolve an issue related to Farmer's Dairy in accessing market in P.E.I. That now has evolved into Farmer's Dairy looking to access market in New Brunswick. There are constantly interprovincial trade related issues. Perhaps you should be talking to the Minister of Economic Development because he's the trade minister but, by the same token, our department is constantly looking at, you know, how to create a barrier-free trade environment.
If you have provinces that, for example, let's look at Newfoundland and the clear decision taken there to not allow unprocessed product to leave the province. That was, one can argue, a political decision or was it an economic decision. If it was an economic decision, then one would question how wise a decision it was in terms of competitive positioning. Newfoundland's economy has had challenges, and not to compare jurisdictions but I believe
at the end of the day access to market benefits everyone. So are there challenges on a regular basis and do you deal with them as they arise? Yes.
So what happened here in terms of crab, the position taken by the province in this particular instance is specific to crab. It's not related to any other fish product and what you have to do is you have to look - when you begin to review whether or not to look at retaliatory trade sanctions, you have to be very cognizant of what the overall impact could potentially be and move accordingly. We've been dealing, again, with an issue unrelated to this, but the softwood lumber dispute is one clearly that has a number of facets. Atlantic Canada, as a region, had a particular view. B.C. had another view. The midwest had another view. So are our trade people constantly engaged in discussions? Yes they are and, in fact, we have within the Department of Agriculture and Fisheries an individual who is spending more and more of his time specifically on trade and market-related issues.
MR. MACDONELL: Thank you, I think I've probably gotten as much of an answer as I'm going to get on that without going around in circles. I just want to be clear, at least I am going to try to make a point with you, I guess, on the issue of access to market. There's a big difference between selling crab unprocessed, no value added or anything going on here and letting someone else do that and create jobs. That's still a market. If you sell it to them, it's a market. I think the thing that we want to be clear about is we want to try to maximize the potential for jobs that those crab could have in Nova Scotia and then sell that processed crab to a potential market and generate more value here for that. That's really the point that I want to make. I mean we can sell crab, we can sell logs but, you know, anything that we can do to create value-added products, that's the direction I would like to see the government.
MR. BALSER: Government is a piece of that. Industry is also a piece of that. As the minister, I had extensive discussions with the processing sector about that and, interestingly enough, as ironic as it may be, there were significant discussions about what value add actually means. If you're talking about value add, perhaps fresh fish product taken as quickly from the boat to the market with quality intact is value add. Or is it turning a fish fillet into a fish stick or if you look at the lobster industry, for example, value add for them, I suspect, would be getting live lobster, as I say, from the boat to the market in Boston, or France, as quickly and in as high a quality as possible.
So that has been a challenge, I think, that the department faced long before I ever arrived in terms of what is value add and how do you determine exactly what value add means and how do you extract the largest value add. In some instances, if you're saying that value add is creating as many jobs in the processing side in Arichat or Shelburne or whatever, that would be one person's view of value add. Perhaps for the processor, it's getting that crab to market at the highest possible value.
MR. MACDONELL: Well, I agree. Certainly, I'm not saying that there is the possibility of every crab being processed here, that there will be some market that's selling the crab as it comes out of the water and letting somebody else do that. It depends on what you have in terms of investment by those who want to put up that other plant and the possibility for the availability of workers and all these other components coming in as factors. Certainly there are logs that get sold out this province, not every one of them is cut into lumber or made into furniture. I guess what I'm saying is the direction we want to go is to try to maximize as much as we can. If you don't have those in place, you're probably going to have to sell raw product and maximize what you can get from that as best you can.
It seems to me, if my memory is right, that Sambro has kind of a co-managed fishery there, a processing plant. I don't know if they work in conjunction with the fishers in that community, if the federal government has allocated quota to a co-operative there? Are you aware of that or how that works? Maybe Mr. Underwood is aware of what goes on at Sambro.
MR. BALSER: The deputy indicated he hasn't heard anything recently. He did know and acknowledge it was a fairly unique situation. In terms of quota allocation, that's clearly a federal initiative, and we work very closely. That whole issue of how best to allocate quota to ensure long-term viability of our coastal communities is a significant challenge. If you're looking for specific information related to Sambro, we will take that under advisement and try to get it. I can tell you that in my community, since I represent a riding that has a number of small coastal communities, that has been an ongoing concern. We talked to the federal government, but at the end of the day, by and large, they have the ability to dictate how quota will be allocated.
MR. MACDONELL: I raise it only because I think it's working there. It's something that I would like to see the province pursue the federal government on, as a model that might actually work well in other communities, maybe it would have to re-tweaked, depending on the community.
I will throw this at you, and then you can probably throw it back. It struck me that if the federal government would allocate quota to the province, just to the provincial government, the Department of Agriculture and Fisheries, and let the department put that quota where it saw fit, that you may have a little more flexibility in trying to sustain communities. It may be a role where you can just assume the federal government had it, and then the headaches associated with it would be entirely theirs. But I find the headache of trying to deal with the federal government on it, I would kind of like to have that power to say, look, you guys give us the quota, we will allocate it as we see fit, and they can still do the conservation stuff around what the actual allocation should be, what the stock numbers are like, and that would kind of take that part of budgeting away from the province. They wouldn't have to be concerned about that. The federal government could actually still do that.
[6:45 p.m.]
I personally would like to have the flexibility of doing the allocations, and I would be willing to take the lumps of the responsibility that come with that. Certainly, the frustration of watching communities and trying to come up with solutions for them in an area where the federal government has jurisdiction, or all the jurisdiction, and the province has none, I find particularly frustrating. You may find it a blessing, that it's them and not us. Anyway, you don't need to comment. If you want to . . .
MR. BALSER: What's that adage, heavy is the head that wears the crown? If you have to make those decisions, obviously there will be those who are disappointed and those who are not. Your suggestion that to some degree the fisheries should be used for social engineering, that's a challenge, and I recognize that the rural community is the lifeblood of this province and all of Atlantic Canada. You look at how that industry has evolved over time, it's very difficult.
No one, I think, initially anticipated the kinds of collapses that occurred around the groundfishery, the restructuring that occurred. I would say that the companies that emerged are stronger, probably smarter companies that are looking at - back to our comments earlier on about value add. If you look at the actual dollar value of the fishery, it has increased dramatically with less landings. That's obviously caused some significant restructuring in our coastal communities.
I had the opportunity to listen to our federal minister speak and he talked about a time 100 years ago, when rural Nova Scotia, you fished in the season and you worked in the log camps in the winter, and you kept a few head of cattle and some pigs and some chickens. The industry has evolved to a level where that's not necessarily possible anymore. Having said that, is there some value in having community-based input in the way quotas are allocated and the strategy? Yes. In my community, I can tell you that every community with a wharf has a different view of what's the right strategy. It's sometimes very difficult to find a common ground.
MR. MACDONELL: I agree. I'm not one of these people who believes that going from point A to point B is necessarily inevitable. I believe that the way the fishery is is the result of federal policy and a certain direction or vision by the federal government. I don't believe that that necessarily has to be the way. As a matter of fact, we may be going down a road that it may be inevitable, that what's left of the fishery, if you try to change that, it's going to become extremely difficult. I don't believe that where we are is necessarily where we would have been with a little more vision and with an emphasis on trying to sustain those rural communities.
I definitely think they made what they made, and we're trying to live with that. I think to try to maximize the benefit of the resource to the most people, we haven't done that. We see the same thing, actually, I think, in forestry. As the technology evolves, our harvest has gone up and the job creation has gone down. I think, probably for the taxpayer, they're starting to ask the question, where's the benefit to us in this? Maybe that will be the impetus for change. Well, I will leave those thoughts with you. I know you will lie awake tonight mulling that over. If you come up with something that works out of that, I will take credit for it.
I am interested in concerns, I guess, around proposed seismic testing in the Northumberland Strait. There were public hearings, I believe, done on that.
MR. BALSER: You're speaking about Inverness?
MR. MACDONELL: Yes. Actually, I'm speaking about Pictou in particular, but I think the hearings were done in Cape Breton.
MR. BALSER: The actual block is off the coast of Inverness, so it's up in that area as opposed to the Northumberland Strait.
MR. MACDONELL: I'm curious if that hearing process required a Class 2 environmental assessment, or do any hearings on exploration require a full environmental . . .
MR. BALSER: I can speak to it in part from a previous life and in part from what I know today. I can tell you that the whole entire process around Inverness and the Sydney Bight, that Hunt and Corridor were the two oil companies. That's been perhaps the most comprehensive review undertaken, certainly in Atlantic Canada. It's been two years in the process. After Theresa MacNeil undertook the hearings, she made some recommendations about how to go forward. There was a committee struck and there were decisions and recommendations made that would allow for seismic testing to occur in a very narrow window of opportunity, if you will. So I would say that the analysis that was undertaken and the public consultation was as rigorous as ever has been undertaken.
Obviously the fishing industry is concerned about, and rightly so, the potential impact on fish larvae or snow crab or lobster, and certainly Theresa MacNeil's comments around the need for science - science will never have a definitive answer but certainly that was put forward as a challenge. At the end of the day, the decision was made to allow a limited opportunity for seismic. I've always been a proponent of co-existence, that there has to be room for all to have access to the ocean and its resources in a sustainable, comprehensively managed manner.
The answer to your question is that there was extensive analysis undertaken. The recommendations reflect, as near as I understand, the requirements of the federal and provincial regulations related to CNSOPB and the Department of Environment and Labour and the CEA process, I believe it's called, the Canadian environmental association.
MR. MACDONELL: I just looked at the executive summary, I think, for Theresa MacNeil's report. It struck me as though she didn't really come out one way or the other, that she wanted the issues of the stakeholders to be addressed. It hasn't been clear to me that they ever were. When you talk about doing this in a sustainable way, there's no such thing when it comes to the offshore, as far as oil and gas production because it's a finite resource. It's not renewable, it's going to be gone, even if we were to say, look, it will be 50 years or 100 years - let's say it will be 100 years before we can extract all the oil and gas off the coast of Nova Scotia.
I want to know, what's that worth in terms of 500 years of a fishery? Right now, we don't get enough in royalties to pay for running the Petroleum Directorate. We are getting $1 billion in value a year from the fishery, and that's a fishery that's a depressed fishery. In other words, the value of the landings are up even though the landings are down. That is something that's sustainable. That's renewable and sustainable with the right policies in place, which adds to the frustration of dealing with the federal government.
As much as I'm actually in favour of offshore development, I don't want that to be at the expense of something that I see can go on to the end of time if it's managed properly. I don't expect at all that the oil and gas industry can do that. There's my concern, that these jobs that these people know are there and have counted on for hundreds of years, we have the potential of losing that for very little in the offshore. I guess that's my analysis.
MR. BALSER: I'm no longer the Minister of Energy, so I will allow him in his estimates to respond to that. But in terms of the fishery, certainly so. The fact is that we have to ensure that the fishery is protected. It's a known and finite. The fishing industry has its challenges, as I said earlier in one of my comments, no one anticipated a collapse of the groundfishery or the level of activity being directed towards the snow crab fishery, and there are already questions about whether or not science will support the continued access of that stock at the current levels.
When you have a fishery that is challenged, and you have tremendous resource and activity being redirected, it creates tremendous challenges. By the same token, I think that everyone recognizes that we need to have a diversified economy, that in order to truly be all we can be, if you will, we have to have a growing oil and gas sector. We have to have a manufacturing sector, we have to have a forestry sector and agriculture and fisheries. I do agree with you in that the agriculture and fishery sector has tremendous untapped potential, that if you look at the best in practice of some of our companies, they're global leaders and
they have the expertise and wherewithal to extract additional value from, whether it's snow crab or lobster or the groundfisheries that continue to exist.
MR. CHAIRMAN: Your time has expired. It is time for the Liberal caucus to ask some questions of the minister.
The honourable Leader in the House of the Liberal Party, your time is 6:55 p.m.
MR. WAYNE GAUDET: Mr. Chairman, I think, at the outset everyone recognizes that agriculture is a dynamic and exciting industry. It certainly has been for many years and it will continue to be. I think everyone recognizes that this industry has been built on pride, on tradition for many families, many generations. I know at home, agriculture certainly contributes to the local economy. I'm sure, especially going around the province, agriculture certainly contributes to many local economies in many rural communities across Nova Scotia. I just have a few general questions to begin with. I'm just wondering, in terms of farms, how many farms do we have now in Nova Scotia? Let's start off with that one.
MR. BALSER: I believe in my opening comments I said something in the neighbourhood of 4,000. I stand to be corrected on that, but I believe that was the number.
MR. GAUDET: I'm just wondering, not necessarily just the last year, but maybe five years, would you say that the number is pretty well stable or is decreasing somewhat or increasing somewhat?
MR. BALSER: The quick answer is that the number of farms is decreasing, but those farms that remain are increasing productivity. That whole issue of what's happening in the agricultural sector in terms of the future, if you will, we have an aging demographic, we have consolidation because of economies of scale. The dairy industry would be a clear example of that, 35 years ago you had a great many more farmers who were milk producers. Because of consolidation, there are less of them but they're actually producing more.
MR. GAUDET: In terms of decreasing farms, are we looking at a particular commodity group or is that right across the farming industry?
MR. BALSER: It's safe to say it runs across the industry, although, again, a sector, the mink industry for example, because of current prices for mink, there have been a number of new entrants. If you look at a dairy industry, it's one clearly where consolidation has been the norm. There's no one simple answer.
MR. GAUDET: I'm just wondering, especially with the direct jobs that agriculture creates, do we have some kind of general number that the industry or the department uses? How many people are directly involved?
MR. BALSER: We can get the detail. In my opening comments, I did mention numbers generally. At the risk of going out on a limb, I thought it was something like 11,000, but I'm not sure. To be safe, we will get that number for you so you will have a specific number. It is a significant employer, particularly in rural Nova Scotia.
MR. GAUDET: Do you see that number growing?
MR. BALSER: It's difficult to predict. Part of the challenge you have, to be blunt, is that the agriculture sector has not been able to attract new entrants. Part of the problem is simply the costs associated with becoming a new entrant. Again, if you take dairy farming or any of these commodity groups, they're particularly front-end capital intensive. There's that whole issue of inter-generational transfer. Beyond that, I would say that young people have not seen the agriculture sector as being a sector of the economy where they see themselves.
I was very impressed with the kinds of percentages. In my opening comments, again, 91 per cent of the graduates from the Nova Scotia Agricultural College have employment six months after they graduate. If you look at that statistic versus, and this is not to minimize the quality of a university undergraduate degree, but comparatively speaking, a young person today, looking at their employability if you will, might give more than passing thought to the Agricultural College.
[7:00 p.m.]
We're trying to develop new programs. Again, the number of scholarships being given, I think $125,000 worth of scholarships are given annually from the Agricultural College for young people who are - we hear every day in the Legislature about the costs associated with post-secondary education. So I think what we need to do, industry itself needs to really take this issue head on. If they want to sort of change the way young people or people generally view the agricultural sector as a career choice, we all need to start rowing the boat in the same direction and talk about it.
Today's farmer is every bit as technologically driven as any high-tech - whatever that may mean - kind of sector, and I don't think people will fully recognize that. A farmer, today, to be successful, they have to be worried about international markets, they have to be worried about nature, they have to be worried about commodity groups and competition and, certainly, from the federal government perspective, food safety. So, for a young person looking at that industry, they would have a world of opportunity.
MR. GAUDET: I certainly agree the industry is certainly fast changing. I think we've heard many individuals talking about the industry in Nova Scotia as worth well over $1 billion. I'm just looking at the farm gate receipts. Do we have some indication what it is in 2002? Is that number growing or it's pretty well stable, do we know?
MR. BALSER: The quick answer is, as I said, it's very much like the fishery, that the actual dollar values are increasing. So we're projecting, receipts to be projected at $422.4 million. That's down a little bit, but it's reflective of - again, we've talked about some of the challenges the industry faces, you can have a potato blight that impacts on the industry or you can have changes in hog prices or poultry prices. So it's a very challenging sector.
MR. GAUDET: I think everyone recognizes that the industry certainly offers great potential in terms of opportunities and development. I'm just wondering what is the department doing to help encourage further development in the agricultural industry?
MR. BALSER: There are any number of initiatives that have been brought forward. Again, in my opening comments I talked a bit about the kinds of long-term strategies, the Agriculture Policy Framework, just in terms of putting in place a policy that is national in scope and gives the industry practitioners a clear understanding. We've had a number of initiatives related to new marketing opportunities, Taste of Nova Scotia is an example, talking to processors about how they can create value add. I think if you look at the Oxford Frozen Foods and what they've done in terms of blueberries and carrots is a shining example of how you can grow this sector. The programs available are wide-ranging. AgraPoint provides technological supports to industry. Whether it's the recent problem with the maple sugar industry, we were there to provide support in trying to work with them to meet those challenges, and we've talked from the perspective of cranberries, how to develop that sector.
I think what's happening in the industry is that there's a changing strategy. Agri-business, I think is more than just a buzzword. These people in the industry who truly want to be successful have to look at vertical integration from the field to the market. If you look at some of the industry leaders, I mentioned Oxford Frozen Foods and what they've done in blueberries and carrots; if you look at the Irvings and what they've been able to do with Cavendish Foods; McCain's in terms of potatoes; Avon Valley; Sarsfield, for example, in terms of taking raspberries, rhubarb and strawberries and turning them into a value-add product that's being marketed globally. I think today's agriculturalist has to really be focused on where the market opportunities lie and that's something that the department has really been focusing on, the marketing side of things; as I say, with Taste of Nova Scotia, with Brand Nova Scotia, with various commodity groups.
MR. GAUDET: So is the department focusing on certain sectors of the industry or, again, in relation to what's marketable, what are the possibilities?
MR. BALSER: The answer is yes and no. Do we have a particular commodity sector we think is the next shining star? No, but we do have areas that we are focusing on. As I say, we have agrologists who are looking at particular commodity groups like blueberries; like apples, for example, there's, I believe, a tremendous opportunity. The apple industry, our apple orchards are old, and consumer tastes have changed. The industry, with funding in part
from the province, undertook a comprehensive economic development strategy relating to the fruit growers and what kinds of products they should be focusing on.
Interestingly enough, just last week I was in Montreal talking to a tri-national committee. There were states and provinces, and representatives from Mexico as well. What came out of that, related specifically to apples, was a desire to focus on the Eastern Seaboard, because in this instance the U.S. is not our competition, they're our partners, and they were saying they have the same challenges. So, from a sector group, we're looking at fruit growers and saying how do we work with you. We've invested in a strategy for revitalization, and we can move forward and actually can have all of Atlantic Canada and the New England States focus on the same outcome, because the market opportunity is outside of our jurisdictions and our competition, really, to be blunt, would be probably the West Coast.
MR. GAUDET: Turning over to the Supplementary Detail, I want to go to Page 3.4. Under Senior Management, we're looking at spending $206,000 in grants. Are we still providing grants to exhibitions in Nova Scotia?
MR. BALSER: Yes, we do.
MR. GAUDET: We are. How much?
MR. BALSER: It is about $176,000. I met with them not that long ago and indicated that they do very good things and that their funding, as best we could, would be maintained.
MR. GAUDET: Is that funding to exhibitions still divided by different size? I'm looking at the ones at home, the Digby Exhibition versus the Yarmouth Exhibition, which is larger.
MR. BALSER: We will check on it, but I believe that they work it out amongst themselves. Basically, when I met with the association, we talked about that and what they asked was would our funding remain intact for the coming fiscal year. I indicated, as best as possible, they should anticipate that same level of funding. I believe they meet as a group and then make their determination, but I will take that under advisement.
MR. GAUDET: But the level of funding we're providing exhibitions this year is the same as last year?
MR. BALSER: Yes.
MR. GAUDET: Who else received grants from the department?
MR. BALSER: It varies. We can go down a list if you . . .
MR. GAUDET: No, I'm just curious.
MR. BALSER: Well, there would be, for example, the SPCA receives an operating grant. The Fall Fair Light Horse Program would receive a grant. We have the APASCC. So it varies. They make application. There's not a whole lot of grants available any longer. We do assist where we can; the 4H, I believe they get some assistance from us.
MR. GAUDET: I'm just curious, coming back to the SPCA, what would we be providing them a grant for?
MR. BALSER: They are responsible for overseeing the regulations or the way in which animal care is dealt with. I believe the grant is something in the neighbourhood of $3,000, so it's not a tremendous amount of money. There's a provincial body and then there are local organizations and so on. My understanding is the $3,000 grant assists the provincial overarching organization.
MR. GAUDET: I guess for my clarification, the Department of Agriculture and Fisheries is not overlooking the SPCA?
MR. BALSER: That's right. It falls under the minister's mandate, but in reality it really is a body at length from the minister.
MR. GAUDET: The next budget item is agricultural scholarships. Mr. Minister, you indicated earlier in previous comments - I guess what I'm looking for, are these scholarships strictly for Nova Scotia students? How do you qualify for a scholarship? Let's start off with, are these scholarships particularly for Nova Scotia students?
MR. BALSER: I don't know specifically, the breakdown in terms of does it go exclusively to Nova Scotia students?
MR. GAUDET: Yes.
MR. BALSER: I will have to get clarification. Okay, it says all Nova Scotia students with an average of 80 per cent or higher will receive entrance scholarships from the Nova Scotia Agricultural College: $2,500 to students with averages over 80; $1,500 for students with averages between 85 and 89; $1,000 for students with averages between 80 and 84. For entrance scholarship purposes the determining average is based on either the average of required courses for admission for first term or final Grade 12 marks and, in the second case, the average of final marks of required courses for admission from first semester Grade 12 and final marks from Grade 11, it doesn't specifically say. We will have to take that under advisement. I don't know that it's exclusive to Nova Scotia students.
MR. GAUDET: I was just curious.
MR. BALSER: At the discretion of the scholarship committee, scholarships of variable amounts will be awarded to Nova Scotia students who perform well in their studies at the Nova Scotia Agricultural College so, based on that, but again I will seek further clarification.
MR. GAUDET: How many students apply for scholarships? I'm just curious what the rates are. Does everyone applying for a scholarship receive one, or 50 per cent of those who apply? I'm just curious.
MR. BALSER: I don't have that number. I would say that folklore has it that the Nova Scotia Agricultural College has one of the better scholarship programs available. I think there are 700 students enrolled. So, just a comparison, of the amount of money available, $135,000. So the odds are if you're fairly reasonably strong academically that you will be in line.
MR. GAUDET: Very good. Just going down and looking at Agriculture Services, Programs and Risk Management, last year we spent, it's kind of interesting, the Estimate says $6.8 million and the Forecast was $12.1 million and this year we're looking at $11.1 million I think. I guess the provincial government has been providing funding for safety net programs to help stabilize farm income. I know last Fall, looking at the pork industry in Nova Scotia, especially when the prices dropped - that's nothing new, Mr. Chairman, we've seen that, and especially the people involved in industry have seen the prices fluctuating, but looking back at these stabilization income programs, I'm just wondering who are these safety net programs available to?
MR. BALSER: That's one of the challenges that certainly as a new minister I was quite surprised to see the whole Agriculture Policy Framework discussion. One of the very first meetings I attended involved the federal minister and provincial ministers and they were talking specifically about that. I guess the quick answer would be that the relief programs that had been available, historically, were available based on a very informal ad hoc-kind of relationship. So if you had difficulty with the pork industry, there might be a program generated to assist them. If there was a problem with the turkey producers, there might be a program generated to assist them or if there was a problem with drought, there would be a drought relief program, and on the story went. Certainly what I heard from all of my colleagues and from the federal minister, in particular, was the need to try to create a policy framework that had clear rules to get away from ad hocery because the challenge, I believe, and I saw it first-hand, was that it created an environment of dependence and it politicized, in a small "p" way, the way in which support was made available.
[7:15 p.m.]
So you had, under the previous government, the pork industry had a challenge and there was a program developed for assistance then, and we went along for a few years and then under this government there was another crisis in the pork industry and another program developed. So what needs to happen, I believe, and certainly what the federal government has indicated they desire and we're certainly moving in that direction, is a program where NISA is expanded and improved to provide income stabilization for agricultural opportunities that go afoul. If it's the pork industry and you have paid into the NISA in the good times, then you draw out to stabilize your income, or in terms of grain or these other groups and, beyond that, the other piece of this would be the expansion of the insurance programs that are available.
One of the stories that I heard early on was of a bean producer who had green and yellow beans and his problem was that he had a blight with his green beans, and his yellow beans were reasonably successful, but because the program didn't effectively deal with that he wound up using - the bean commodity group that was successful had to underwrite his losses in the other one, which really was not appropriate. What should have happened is the insurance program should have been designed so that if you had a problem, you could address that.
So part of what the industry and government is trying to do right now simultaneously with the policy framework and the work there and the expansion of it and the improvement of the NISA accounts is they're looking at how do we make an insurance program available so that the farmer can look at what options are available to him to minimize his risk. He can look to his NISA account if he has contributed to that to provide income stabilization to a degree, and then he can then underwrite through an insurance program some of his other risks. I believe that at the end of the day that will be a much fairer system than if we have a problem in the poultry industry and everyone comes in to ask for government assistance on an ad hoc basis because, as I say, what happens is a tremendous level of inconsistency.
MR. GAUDET: In speaking with the federation not long ago, I was under the impression that the province had just signed off with the feds under a new stabilization program. Am I correct?
MR. BALSER: We indicated intent to move forward. That whole income stabilization program, the APF, hasn't been finalized. I was involved in a conference call just last week with the federal minister and they're attempting to bring this program forward, if you will. The question from the Canadian Federation of Agriculture, they wanted a third-party analysis of the program to determine what it looked like and whether or not it adequately dealt with their concerns. Unfortunately, the Canadian Agriculture Federation has chosen not to endorse that. The federal minister has indicated he will move forward with that analysis in spite of that and hope that at the end of the day the third party analysis will verify.
What the agricultural community has said is that they're very concerned about a vacuum being created between the old program and the full implementation of the new program, that they will be exposed to some level of risk. Now, that certainly was an issue that we raised, that every jurisdiction raised, that there has to be a seamless transition. Any time you make changes, it's a challenge. Industry has significant reservations, but I believe that once we see the final document and the way in which it's potentially going to unfocus, we've had significant input, our people have been very involved through this process from the beginning and I think it's a move in the right direction.
As I said, the problem you have, and previous governments have faced it the same as us, you have very compelling arguments being made, whether it's the plight of the maple growers, or the pork industry, or pick a commodity group, but to turn to government to say you now have to fix this problem for us or have to provide financial assistance in the absence of some kind of clear framework, it creates challenges because you wind up with inconsistency. So what we're suggesting is that if you, as a farmer in a particular commodity group, can sit down and you can look at your business plan and say this is the level of risk that I can accept and these are the programs that are available to me and then I will make some business decisions based on that.
MR. GAUDET: I'm just curious, did Nova Scotia have the option of extending the current agreement, or were we in a rush that we had to sign up? Have other provinces signed on this new agreement? I guess let's start off with that.
MR. BALSER: This has not been a rushed process. This has been something that has been in the works for some significant length of time. Long before I ever became minister the discussions have been ongoing. I think it's probably a year to a year and a half at least. So it wasn't a rushed process. I think as you move along there comes a point where you have to start to make some decisions, and so will you ever have universal endorsement? It would be a stretch to say that. Did we have to sign on? Yes and no, in that you have to be going somewhere. It went all over the provinces and the territories, and the federal government said this is the direction we're going in, you can either be part of the planning process or you can be swept along with the tide after it's over. It seemed reasonable to be at the table trying to make those decisions.
I would say, from my observations, that most of the provinces have accepted where we're headed. One of the most interesting was Saskatchewan. Saskatchewan initially was very, very concerned about the direction we were going and I came into the discussions pretty well down the trail. What was really interesting for me is at the last conference call the minister from Saskatchewan was very anxious to move this forward and say, we have spent a year to a year and a half trying to work through this piece. You reach a point where you have to say there's where we're going and try to make the best of it. It's clear to me that the federal minister and the federal department is committed to this and so you can be part of it
or you can be swept along. I think it's probably better to be part of it and try to have your opportunity to provide input.
We've engaged, I know the deputy and the people who are directly involved in this have had countless meetings with the industry about what are your concerns and how can we move this forward and how can we deal with this. At the meeting in Toronto the President of the Canadian Agriculture Federation was able to sit down at a breakfast meeting with all of us and talk about his concerns. So I think the industry can't say that they weren't engaged. They may not like entirely where we wound up, but they certainly have had an opportunity to be part of it.
MR. GAUDET: I'm just wondering, looking at the budget item of $11.1 million, how much is our province looking at putting into this new stabilization program?
MR. BALSER: The APF initiative funding is about $4 million, which speaks to the difference between $6 million and $11 million pretty well. The safety net funding will be about $1.7 million. The risk management programs are about $1.3 million and crop insurance is about $110,000. So we actually, in anticipation of this thing moving forward, have committed the funds to be there and, in fact, one of the comments that I made when I spoke to the federal minister, because he was asking where provinces were in terms of dealing with this, I indicated that in anticipation of this moving forward that we had, in the budgeting process, made a commitment to those funds.
MR. GAUDET: In looking at how much we're putting in on this round compared to the previous agreement, how do we fare? Are we lower or the same amount roughly?
MR. BALSER: I think it's safe to say that we have been contributing increasing amounts of money to that program and that this will actually, because it's becoming formalized, represent a significant commitment on the part of the province.
MR. GAUDET: I want to move down to quality evaluation on the same page. Maybe the minister could tell me - I'm not sure if I'm in the right budget item - does Quality Evaluation have to do with food safety?
MR. BALSER: I believe so. Yes.
MR. GAUDET: Yes, it does.
MR. BALSER: Meat inspection and food safety and these programs.
MR. GAUDET: I guess I want to start off with the small beef farmers because I have a couple uncles who are involved in that and there are many people not just in my riding but I'm sure in many of the rural communities who are part-time beef producers. I know one concern that has been expressed by my uncle and others is if the new inspection regulations are going to force them out of business, could the minister indicate, will all producers have to sell directly to slaughter facilities that are inspected? As I'm sure the minister is aware, throughout Digby County there are many part-time beef producers for which it's a way of life, who have been selling meat, especially in the Fall, to their neighbours, to family members, to clients that they have pretty well been selling to for years and years. The question that I've been asked is it the intention of the government to force us out of business? So maybe if you could start off with this one.
MR. BALSER: There are two parts to that. Obviously, we have to be very, very concerned about food quality and food safety and so we have to take steps to ensure that consumers and producers are protected. There are issues related. Liability is a growing concern across the board. In terms of the regulations you're speaking of, we have not come to any final determination related to those. Certainly, initially, when they were brought forward, there was a great deal of interest expressed by the very people you're talking about. You're absolutely right, in rural Nova Scotia a number of people produce freezer beef, if you will, and they've had their markets established for some time and we're cognizant of the concerns they have, but the quick answer is we haven't made any final determination. We are concerned about food safety. We are concerned about liability, and that is a very difficult balancing act, if you will. That there are people who will have to look at the way in which they have conducted business and not because they were doing anything wrong but simply because people's expectations have changed. The whole issue of CFIA and food quality, those are real genuine challenges that everyone faces. So your point is taken. We haven't made a final determination yet. We're aware of the challenges the little guy faces and we will try to accommodate that.
MR. GAUDET: Mr. Chairman, I agree with the minister, having been there myself and I know, especially looking at both sides this has been technically a way of life for years and years. For government to come down with a decision, and I know ultimately the safety issue has to be dealt with at some point, but at the same time I think there has to be something built into the government's response because, after all, these producers haven't just started recently, they've been selling to their clients for I'm sure the last 20 years, and these customers of theirs know what type of quality beef they're buying. They know exactly what they've been buying for years and years. For a producer just to stop providing the quality that they have been providing, all of a sudden a lot of these small-time beef farmers are going to just basically be driven out of business. So, they have a reputation, themselves, that they have to continue to provide to their customers.
[7:30 p.m.]
The minister indicated that they haven't yet made a decision, could the minister indicate if they have a time frame that they're looking at in order to inform the industry what the plan is? What do we anticipate doing as far as time frame is concerned?
MR. BALSER: The Premier, when asked those kinds of questions, says soon, very soon. Obviously we want to look at what makes sense. You articulated the issue very eloquently, probably in large part because you've been there. What we need to do before you make a decision or before you commit to a timeline, is understand fully the potential implications and how doable it is. At this juncture, I have no firm timeline other than to say that we're looking at the information and it hasn't been something that has been forefront on my agenda since I became minister, but it may well be within the department somewhere. Again, I take your comments under advisement, and we need to understand fully the potential impact on the small producers and, at the same time, the potential risk if action isn't taken.
MR. GAUDET: On that very same topic, apart from the beef farmers themselves, I have a small slaughter facility in my riding. Right now, as I understand, this individual is not obligated or requested to have a mandatory meat inspection facility. I know, especially during the Fall, a lot of people will bring their animals to his place to have them slaughtered. His question was, and I suspect the fact that the department has not made a decision in terms of exactly what will, at the end of the day, be the government's response, this individual was asking what's going to happen to me and to my facility? If I'm regulated or if I have to meet these regulations there's a good chance that I'm going to have to close my operation. At the same time, where are all these individuals going to take their animals to be slaughtered? I guess, in terms of small slaughterhouses and small freezer beef businesses, it will probably be answered at the same time. I'm just curious, is the government looking at coming down with some type of regulations to regulate all slaughter facilities, big or small? I know most of the big ones are already being inspected and fall under the regulations, but these smaller facilities, I'm just wondering what the department's intention is.
MR. BALSER: Again, the problem is that safety has to be paramount. Recognizing that small processors, producers have challenges but, by the same token, the risk of liability is still there. What we will attempt to do is try to work with the small producers and processors, how they can be taken from where they are today to where they need to be whatever that set of regulations may look like, without making it impossible for them to do business. But, at the same time, the potential risk for a significant problem is there. You look at some of the issues that are completely unrelated. The issue of water quality, for example, you can't simply say you're small, and so you have to worry about that, you have to say how far do you need to go to ensure safety and, at the same time, continue to be viable.
We're not trying to create a situation where we're going to force people out of business, that's not the intention. We've already spent a fair bit of time talking about rural Nova Scotia and the challenges that face us, and the little producer who does slaughter work for a number of people in a small community, he's an important guy. So, what we will try to do over time is be reasonable and, at the end of the day, you can't abdicate responsibilities related to food safety. Do you have to have the same kinds of rigour for the small guy as you do for a producer that's handling 500, 600 head a day? I don't know.
In part, you've talked about it already. The reason for making haste slowly is because of these challenges. How do you create an environment where the consumer has confidence that his concerns about safety, food quality are being met? A digression, but this whole issue of point-of-origin labelling for food being shipped into the U.S. is going to be a monumental challenge. By the same token, that requirement is being driven by the consumer. The consumer has changed dramatically, and recognizing that someone who provides freezer beef to you or to me is working at a different scale, but the potential for liability is every bit as equal if there's a problem.
MR. GAUDET: Absolutely. I think it's individuals, if we decide to buy from your next-door neighbour that's been in the beef industry for many years, we have to assume part of those responsibilities. It's not just that they have to carry the full load themselves. I hope that the department, before they do arrive at a final decision, will continue to work with the industry to make sure that, in the end, whatever decision is made, certainly the industry can accept those final decisions.
Looking again at quality, the minister pointed out the Taste of Nova Scotia or Buy Nova Scotia, I'm just wondering how much is the department, this year, putting into these programs to help promote identifying our products, to help promote people in this province to buy what is being produced here at home?
MR. BALSER: There's two parts to this, the Brand Nova Scotia initiative which was mentioned in the Speech from the Throne, I think something in the neighbourhood of $700,000. That's an initiative that includes Economic Development and our marketing side. That's one level of initiative. They're just looking now for the Taste of Nova Scotia.
MR. GAUDET: So is that $700,000 being shared between Economic Development and yourself?
MR. BALSER: A portion, under the management plan, if you will, that we all contributed to in terms of how do you brand Nova Scotia as such and what piece comes into where. If you look at, for example, the initiatives at the Boston Seafood Show, is there a role there for branding? In fact, I met with the Nova Scotia fish processors, and out of that meeting one of the suggestions that came forward was an initiative to brand Nova Scotia seafood products in restaurants and promote it so, in theory, tourists who are here visiting our
province would perhaps have fresh Nova Scotia seafood and they would see it on the menu with a logo. That would then cause them, perhaps when they returned home, to look specifically for a fish product that was branded Nova Scotia.
Again, when you get into the country-of-origin labelling issue, it's just beginning to unfold. We're going to have some interesting challenges there. It may well be that it works to our advantage, in that if lobster, for example - right now, as it stands, a lot of Atlantic Canadian lobster is brokered into the Boston market and then redistributed as Maine lobster, but that will no longer be entirely possible with the country-of-origin labelling issue, so it may be that a broker in Boston will say I'm going to get my lobster exclusively from one of the brokers here in Nova Scotia because then he will be able to clearly say this is Brand Nova Scotia lobster.
So it may be that once we work through the pieces that creates a tremendous advantage, but the problem we'll have is if you have a cod coming out of southwest Nova Scotia and some coming out of Newfoundland or wherever and it's all mixed in, how is a company going to differentiate? That's a real challenge for companies like Red Lobster, the restaurant chain that uses literally hundreds and hundreds of pounds of fresh fish daily in their menu. The challenge they're going to have is if they're required to provide country-of-origin labelling for that fish product, it will be just a nightmare for them.
On one hand, they may just simply delist a particular menu selection because it becomes too problematic, or they may wind up going into an exclusive buyer arrangement with some company here in Nova Scotia. I think for our industry, what they're going to need to do is really look through this thing and see how what may initially be a challenge can become an opportunity.
Back to Taste of Nova Scotia, our budget allocation for Taste of Nova Scotia is $189,000. That will be linked to the delivery of agreed-upon projects. There is a board for Taste of Nova Scotia, and I've actually had the opportunity to meet with them and talk about some of their initiatives. I think Taste of Nova Scotia has been a tremendous vehicle for promoting our seafood. In my own riding, we had the Canada AM celebration when they were doing their Cross Canada Tour and Taste of Nova Scotia were there and they actually profiled on the program, chefs from Nova Scotia preparing Nova Scotia seafood and serving it. It's a vehicle that has tremendous cachet in terms of promoting our products and brand names.
MR. GAUDET: I think, looking back at the success that this program has had - I can't remember exactly when it was created, but probably 10 years ago - you look at the fruit growers or the seafood dealers in this province and they certainly have done a tremendous job. I was interested in hearing about how we can brand lobsters. It reminds me of the grocery store where you see - B.C. certainly knows how to do it well, you have these little red tags, B.C. apple. If we could just learn from the pros and advise our consumers here in
Nova Scotia when they're buying products in the stores. That Nova Scotia label on the product, I'm sure - and I compliment the minister with these initiatives. I don't think we can expect the industry to do it alone. This is a very worthwhile partnership. By selling more, we're creating more jobs. It's a win-win situation all around for government, especially generating more revenues, and at the same time inform the people of Nova Scotia we are providing you with high-quality food on the shelves. Again I want to thank the minister for that.
I want to move to the Agriculture and Fisheries Loan Board. Looking at the Estimates Book, on Page 1.12, we have Nova Scotia Farm Loan Board. We're talking about repayment, 2002-03, $23 million was repaid. This year they anticipate they will collect $18 million. I guess my first question would be how big a portfolio does the Agriculture and Fisheries Loan Board have?
MR. BALSER: It's still separate. They are two separate boards, two separate loan portfolios.
The board approved 214 loans with a value of $26.367 million in 2002-03, but the actual advances, the actual cash payouts under that was $22.409 million.
[7:45 p.m.]
MR. GAUDET: I'm looking on Page 2.1, Nova Scotia Farm Loan Board, it talks about revenue. Last year $141 million was collected and this year we're looking at collecting $125 million. Am I reading that correctly? I'm just trying to understand what this line is for - is it $141,000 or $141 million?
MR. BALSER: The Actual for 2001-02 and the Forecast for 2002-03 are below the Estimate because of the high fee revenue arising from early loan repayments in response to low or short-term interest rates versus the longer-term interest rates. Actually, this was one that I think John asked and it's reflective more of the fluctuations in the money market as opposed to changes in the loan portfolio. The revenue is expected to drop the short- and long- term interest rates to where they were before. There was a differential between the shorter-term interest rate and the longer-term interest rate.
MR. GAUDET: I guess my first question would be how much capital funding does the Farm Loan Board have in the run of a year? Are they allocated a certain budget?
MR. BALSER: Yes, it's in the neighbourhood of $28 million.
MR. GAUDET: What are the lending limits of the board?
MR. BALSER: You mean in terms of actual maximum availability? We'll have to take that under advisement.
MR. GAUDET: Can they approve loans for higher than $1 million without Cabinet approval?
MR. BALSER: There are lending limits - and we'll take this under advisement - $500,000 on the fisheries side and up to $1 million on the farm loan side without approval of Cabinet, but we'll verify that.
Interesting enough, for the pork producers we've made that arrangement to assist them in the form of a loan. I understand that the lending limits had to be adjusted slightly because there was the potential that some of them might be accessing more than the cap.
MR. GAUDET: Mr. Minister, you indicated in last year, 2002-03, the Farm Loan Board approved 214 loans. I'm just wondering how many of these were new loans and how many were additional or existing loans?
MR. BALSER: We'll get that for you, in terms of new versus existing. You're thinking of someone who would come back, out of the 215, someone who had a loan and maybe restructured?
MR. GAUDET: Right.
MR. BALSER: There is some of that. I know in my conversations with some of the people related to the pork industry, we talked about that, and recently in some other commodity groups where they were having challenges - maple growers being a case in point where they had talked about in some instances already having an existing loan and the suggestion was that they might want to restructure that loan in light of the difficulties they were facing as a result of the storm damage. Be patient, that's one of the biggest advantages that I think government lending institutions have available to them is that they can be somewhat patient in terms of their terms and conditions. Whether it's the pork producers, obviously, or the poultry industry, any of these industries that are sometimes caught in cyclical or unique circumstances where traditional lending institutions might apply undue pressure.
Recently, there was an issue where we - and it hasn't come fully to conclusion - sat down with the traditional lending partners, and the province was there, and indicated it was in no one's best interest to have this particular individual's operation cease and that maybe a little bit of patience, over time, would allow them to re-stabilize and move forward. I'm pretty confident that that will happen. That's the kind of lending and portfolio management that we bring.
At Economic Development, I was quite pleased with the fact that our default rate was something in the neighbourhood of 2 per cent, and my understanding is that the Agriculture and Fisheries Loan Boards are as good as Economic Development was. Again, if you look at the kind of lending - although in the fisheries, I guess a lot of the money is tied to lending for boats, some of it's gone to aquaculture and that's been a challenge, but we're pretty confident that we've got the right strategy in place. Sometimes patience is a virtue in this business.
MR. GAUDET: Mr. Minister, I know, especially last Fall with the pork industry, one pork producer went out of business. I'm just wondering what kind of losses did the Farm Loan Board have in the last year?
MR. BALSER: Our forecasted, unaudited loss provision for 2002-03 was about $600,000. On a $24 million loan portfolio, that's not unreasonable.
MR. GAUDET: I guess my next question would be, that $600,000 loss, would that be pretty well average when you look at the last three years, for instance?
MR. BALSER: Actually, it's a bit down from 2001-02, but in that neighbourhood. In 2001-02 it was close to $900,000, so I think it fluctuates. I don't know the level of detail, but looking at the trend, that's in the neighbourhood, it's not significantly higher or lower than.
MR. GAUDET: Looking at loans, what's the current interest charge being used by the Farm Loan Board?
MR. BALSER: It does fluctuate based on the province's ability to borrow. I know, and this is from memory at Economic Development, it was something like 5 per cent, depending on the borrower's credit rating and so on. We'll take that under advisement and get you the actual level of detail.
MR. GAUDET: I'm just wondering if someone approaches the Farm Loan Board for a $200,000 loan or for a $700,000 loan what kind of interest rates do we have? Is it comparable to other financial institutions? Do we, at the Farm Loan Board, provide a better interest rate - do we make it more attractive to farmers to come and see government rather than contact any other financial institution? I guess that's what I'm looking for.
MR. BALSER: It depends. There are really two interest rates applicable here. If it's a long-term investment, the interest rate is fairly attractive. Shorter term is a little bit higher. To some degree, they're not necessarily lenders of last resort because it's a different situation, but it would be my observation - and I guess I would draw more on my experience at Economic Development because that's where I had the most experience. There, generally speaking, we were primarily lenders of last resort. In the agricultural industry, I think because
a lot of these operations have significant capital debt load, they wind up aggregating their loan portfolios, some from the Farm Credit Corporation, some from the Farm Loan Board and some from chartered banks. They usually carry a mixture of financing.
That sometimes creates challenges for them and that's why it comes back to our conversations earlier about being a patient lender. We talked specifically about the pork producers. A number of them probably came in carrying a line of credit with their feed supplier, they perhaps had some capital investment carried from a chartered bank and they may, in some instances, have a farm - one of the services that we provided in more than one instance was to sit down with the operator and say maybe what we need to do is have a conversation with you about your loan structure and about where you're going with this business and maybe renegotiate your entire loan portfolio leaning more towards the Farm Loan Board because it was a more patient lender. There's no one size fits all.
I will say that the staff at the Farm Loan Board have been very, very good about doing that kind of role, helping the farmers with their financial needs, if you will.
MR. GAUDET: Mr. Chairman, I want to thank the minister.
MR. CHAIRMAN: The time for the Liberal caucus has now expired. Before we go to the NDP are there any questions from the government caucus for this member? Hearing none at the present time, I'll go back to the NDP caucus.
The honourable member for Hants East. Your time is now 7:57 p.m. You have up to one hour, sir.
MR. JOHN MACDONELL: Mr. Chairman, I want to go back, I was on the fisheries issue when I left and I have one more question and that was around aquaculture. I guess I'd like to know the province's position as far as looking at more licences. Are there applications coming in that people are looking for sites to put in an aquaculture site? I'd be curious to know the difference in finfish compared to shellfish sites.
MR. BALSER: The quick answer is, yes, there are applications coming forward. One of the concerns that has been expressed by the aquaculture industry, and certainly it has resonated with the federal minister, was around the environmental approval process. Some of the environmental assessments cost $100,000 to $250,000 to be undertaken, and that's a significant front-end capital cost for these operators. The answer is, there are applications. The industry has actually come a long way in the last 15 years from its infancy to where it is today in terms of its sensitivity about environmental issues. There are real challenges facing this.
Just to put things in context, when I was at the Boston Seafood Show, the U.S. brokers indicated there's about $12 billion worth of unsatisfied market potential in the U.S. for fish product. My question to him was, why is that? Is that because we're not marketing properly? He said, no, it's because there literally isn't any fish product to fill that void. So, aquaculture, I believe, has the potential to assist.
You, as well as me and everyone in Nova Scotia have watched debates that have raged around whether or not aquaculture is a suitable economic opportunity for some jurisdictions. I don't know that there will ever be a definitive answer. There's a whole "not in my backyard" view of the world. Having said that, there's also legitimate concerns that have to be addressed. I think the industry itself has to come together, and I would commend the aquaculture association on what they're trying to do, they're very much trying to professionalize the business.
The suitability of sites for shellfish, for example, mussels in particular seem to be fairly popular. We have some challenges now on the oyster side of things, if you will, with MSX and so on, the requirements for a mussel farm versus a finfish location. But no question, we are not necessarily running out of space, but we're challenged by that.
The other thing too is that the industry itself has changed. A lot of the technology is moving away from, if we're talking about finfish, surface cage facilities to mid-water submerged facilities which, to some degree, will deal with the optics of, you know, out of site, out of mind. From the halibut rearing technology there's an initiative, I believe in Norway, where they're attempting to develop cages that are anchored below the surface, are fed remotely and monitored by cameras and so on. Now, that technology is in its infancy, but the industry has recognized that they have challenges, but I believe they're being fairly professional.
[8:00 p.m.]
As far as number of sites for shellfish versus finfish there are about 350 sites currently leased. The species range: Atlantic salmon, rainbow trout, blue mussels, sea scallops, American oysters, there are some with halibut but those primarily being on land; they're doing a lot of nursery stuff. Arctic char, you're probably aware that the Millbrook Band are working on it. There is an aquaculture clam facility in my area that is using processing to deal with taking clams out of closed areas, digging in an enclosed area and processing them so they're good for market.
Where are we going in the next 10 years? I think that it's important that the province and that the federal government focus on an aquaculture development strategy because it remains a tremendous opportunity. Nova Scotia has lagged behind New Brunswick. Having said that, what we have in Nova Scotia that I think at the end of the day will be an advantage, is that we have a very diversified aquaculture industry. New Brunswick has focused
predominantly on salmon and steelhead and moving now into halibut, but we have - I've read the list. What we need to do is get the federal minister to commit in deed - in word, he has committed to the aquaculture, I've heard him give a number of speeches in the last little while where he has talked about the potential for aquaculture - and then make sure that we can deal with the reservations that community groups have.
Some would argue that land-based rearing is the answer. It has potential, but it's not the answer. It's clear that the halibut industry has recognized that land-based facilities have limits. So that's why they're looking at other technologies. So, again, we talk about economic opportunities, education opportunities. For a young person today who wants to have a career in the aquaculture industry, if they were to pursue that in terms of the research and development they would have a lifetime of opportunity.
MR. MACDONELL: You mentioned that the up-front costs for environmental approvals are somewhere in the range of $100,000?
MR. BALSER: It could be the range, I've seen $100,000, I've seen up to $250,000, depending on the level of detail required.
MR. MACDONELL: I have to say that I do see aquaculture as definitely filling a role of meeting the needs for consumption of fish that the natural stocks can't meet. With that said, I have real concerns about the problems associated with finfish aquaculture. There doesn't seem to be so much in terms of environmental or habitat issues around the shellfish industry. I don't know if you're aware that Alaska has banned aquaculture there. They're not involved with finfish aquaculture at all. Along with the issues around the pollution of sites or the threat to lobster grounds or other species, these are natural species that we fish all the time anyway and, actually, lobster fishermen are part of a lobby group against finfish aquaculture sites. So I'm not really sure you're gaining much by sacrificing one part of the industry to support another. I have real concerns around those specimens that escape, which can be big escapes. Certainly some of those in the Bay of Fundy have been enormous and you would be aware . . .
MR. CHAIRMAN: With your indulgence, honourable member for Hants East, we have some special guests in the audience. I would just like to say hello to the Five Islands- Timberlea-Prospect Scout group that is here. I just want to explain what's going on in here. We're having a public debate of the fiscal budget for the year 2003-04. We have the Minister of the Department of Agriculture and Fisheries, Gordon Balser, answering questions from the Opposition members in regard to the various money he has in his department for expenditures towards agriculture and fisheries, as well as the Harness Racing Corporation and the Public Service Commission. I just wanted to let you know the process going on here, and welcome you to the House. Sorry for the interruption, sir.
MR. MACDONELL: No problem, I don't mind the interruption. I will say welcome to our guests and, yes, if they're closer to understanding what's going on here then my hat goes off to them.
I guess I'm making a case for my concerns around finfish aquaculture because I know that certainly the questions arise around issues as far down the line as using fish to feed fish and whether or not we actually should be using - the fish we've processed to feed the fish in the aquaculture sector - to feed people, and whether you're actually making any significant gain by feeding them to other fish and looking at the rate again of those fish and then all the issues around the mess underneath the cages, the pollution, what you have to use to treat the sea lice that they're infected with, et cetera, et cetera.
On the West Coast of this country they're certainly looking at some of these issues because they have Atlantic salmon that has been released into the wild there from aquaculture sites. First they said, well you know, if they escape, they wouldn't live; and then they say, well if they live, they won't breath; then they said, if they spawn, the young won't live, and all these things have been proven not to be true. So certainly, on the East Coast here, it is a real issue around some of these species that we use. Also, I've seen literature around genetically-modified fish that are bigger and better and the impacts of what these species will do in terms of affecting our natural species or indigenous species that are threatened. The Atlantic salmon stocks are not strong in eastern North America so you have to question what really is the overall gain.
If we're looking at a possible $100,000 to $200,000 in environmental costs, then I really would like to see a comprehensive analysis of aquaculture sites on land to see whether or not that actually can work, because I think if you were putting somewhere in the range of $200,000 into a land facility rather than the cost associated with putting it in the water that you may be just as far ahead.
I want to ask the minister about the Millbrook aquaculture site. I don't even know if that's up and going; if you know that, I would really look for information there. It would be my understanding that that would be on land. Is that the case, is that going to be on land?
MR. BALSER: A couple things specific to Millbrook, I haven't toured the facility, I understand it will be a land-based facility. They are going to be focused on Arctic char. Just to put that in context, it has been a very difficult species to raise in a sea-based cage or on land, so if they are successful, it will be a real test case. I look forward to having them be successful because that would put another page in the aquaculture book, if you will.
Just in terms of some of the comments you made about the aquaculture industry and land-based and the environmental hazard and so on, the position taken by Alaska, to some degree has extenuating circumstances beyond the potential of environmental impact. I talked about country of origin labelling, and, as that relates to aquaculture or the fishing industry,
that amendment was placed on the U.S. Farm Bill as a rider by the senator from Alaska, in part, specifically to protect the wild fishery. To be blunt, the motives may have had extenuating circumstances beyond the pure concern about the protection of the environment.
Having said that, your points about fish escaping are reasonable. I do think there is a need for an informed debate about the potential of genetic modification and some of the challenges that have been raised by, in particular, the David Suzuki Foundation. I did have the opportunity while in Boston to talk to people who are involved in the aquaculture industry, and soon, and they have a particular view, and I think they would be prepared to sit down and have an informed debate where they could challenge some of the information that's being put forward.
Oftentimes, there are perspectives and points of view that skew people's understanding and appreciation. If you have an aquaculture site in your backyard, if you will, you may want to view some of the information being put forward as being gospel when, in fact, it may not be entirely founded in fact. I think part of what has to happen from an industry perspective is that the aquaculture industry has to come forward to educate, with a view that people who are informed of both sides of the argument can make an informed decision. I'm not saying one is right and one is wrong, I'm just simply saying that you need to have all sides of the issue put forward before you can make an informed decision.
In terms of the cost, you indicated and I indicated to you, $200,000 for an environment study. If you're talking about salmon being reared, you're probably looking at a five-year front-end capital cost outlay before you have a product that goes to market. So, for a person to become involved in the aquaculture industry, they're going to have to have access to probably $5 million worth of working capital before they get any net return. Halibut is the same. That's one of the reasons why I think a number of aquaculturists have gone into commodities like mussels, because you can turn them around with less of a front-end capital cost.
It's not for the faint of heart. To be blunt, this industry in Nova Scotia has had some stellar failures. We've come a long way, and I believe that you have to continue down the road. We have reached a point, I believe, where the industry has the knowledge base they need, the science is there to support it. To be blunt, I think the aquaculture industry initially, in Nova Scotia, was viewed to be the revitalization of rural Nova Scotian communities that had suffered from the downturn in the fisheries. I can use my community as an example. A number of people who saw fish plants close, who had lost opportunities in the traditional fisheries looked to the aquaculture sector as a way to have fish to be processed in their local plant and create employment. The problem was that the industry didn't necessarily have the knowledge base, the people involved didn't necessarily have the experience needed. Right now, in our industry in Nova Scotia, you have a lot of companies that are either food supply companies, the Shur-Gains of the world or Stoltz and so on, they're beginning to acquire
sites because they have the financial resources, they have the experience. The industry right now is in a state of change.
MR. MACDONELL: They probably have the financial resources to put them on land.
MR. BALSER: But, again, if the technology doesn't support that - and I don't know that it does or it doesn't, I do know that in the case of halibut that the jury is in and that land-based is suitable for rearing them from fry, if you will, to a certain stage; I think maybe two years, three years on land-based and then move them into the water for the last two years of grow out, and because they're swimming in a current and so on it causes the meat to be of a better quality.
MR. MACDONELL: When you said we've had some stellar failures, I'm wondering what has that cost? Were those people who had loans from the province . . .
MR. BALSER: Some instances.
MR. MACDONELL: . . . and what has been the cost to the province? Have they recouped their costs or losses?
MR. BALSER: Again, the most obvious example would be one that we're all familiar with, it was located in Cape Breton, in the Strait area, and it cost the province and the federal government a great deal of money.
MR. MACDONELL: Do you know how much?
[8:15 p.m.]
MR. BALSER: I can tell you from an Economic Development perspective, again this is from memory, but I think the all-in was something like $4 million. That's ancient history, we can look at that and dwell on it and so on. Was it costly? Yes, it was. Did we learn lessons from that? Yes, we did. Can we move forward? Yes, and I think that's the lesson. If you throw up your hands because of a shortcoming - this is a high-risk business. We've come to the point now we're there are a number of operators, particularly on the mussel side, oysters as well that have - the industry has to grow and progress.
MR. MACDONELL: I want to be clear, I'm not raising reservations around the shellfish side of it. I see mussels and oysters as having such a minimal impact, at least so far, as far as we've been able to determine, on the environment. These species have not raised the same level of concern, actually, even in terms of in-my-backyard type of issue that you refer to. It would seem to me that $4 million of the taxpayers' money in one operation is a pretty significant sum to be thinking about. If that was $4 million of their money and not the taxpayers, I would say, yes, I can agree with you, it's one incident and maybe better luck to
the next guy, but when you're talking about our money, I have a little more of a problem with that.
Anyway, I don't want to beat a dead horse here. I raise these concerns, I think lots of people do. I just have one question around what, to your knowledge, is happening around the proposed facility at Northwest Cove? Is that going forward?
MR. BALSER: Nothing has come forward. The current owner is in discussions with a partner to look at what might be done there. They are also talking about some other species. I talked about halibut as opposed to salmon. Those discussions are ongoing. There's been no definitive go-forward at this juncture.
MR. MACDONELL: How much has that operation received from the province?
MR. BALSER: Nothing that we're aware of, but we will check.
MR. MACDONELL: Has that proponent or that person . . .
MR. BALSER: We will check. The deputy indicated that Aquafish has a loan, but he thought it was for the hatchery, not for the site in Northwest Cove.
MR. MACDONELL: Aquafish, is that the company?
MR. BALSER: Yes, we will have to take that under advisement.
MR. MACDONELL: Can you tell me, even outside of Northwest Cove, how much money have they gotten from the province?
MR. BALSER: That's what I just indicated we would check.
MR. MACDONELL: Very good, because it's obvious, it certainly has been obvious to me, I met with people down there, they're not impressed, they don't want that operation. I'm curious, is there any kind of an agreement in the licensing part for the province, if they assign a licence to a particular area that has a time limit, for example you have to have this operation up and going by a certain date or the licence is null and void, or you have to reapply, what's the story?
MR. BALSER: We will get that level of detail for you. Just to put things in context, the Northwest Cove site has 52 conditions related to that particular site. Concerns tend to be put forward and have to be dealt with appropriately. As I say, it's a rare occasion when you satisfy everyone on every point. The reality is, on the Northwest Cove side, in order for the economy to grow you have to have economic development and you have to try to balance both sides. We've talked about a number of initiatives and it's constantly a question of how
do you ensure that a company can make an investment decision in an environment where they know the rules of the game and that the rules will not change and, at the same time, address the concerns of the community group's question. Fifty-two conditions is significant, I would tend to think.
MR. MACDONELL: It sounds like a lot to me. I'm just wondering if some of those conditions have already rendered them incapable - have they breached some of them?
MR. BALSER: Not that we're aware of at this juncture.
MR. MACDONELL: I want to get back to the estimates, on Page 3.5, Net Program Expenses, Grants and Contributions. I see that the Forecast for 2002-03 is in the range of $17 million. The Estimate is down for 2003-04.
MR. BALSER: What was the page number again?
MR. MACDONELL: Page 3.5. It's Net Program Expenses.
MR. BALSER: The question is why has it gone from . . .
MR. MACDONELL: Yes, I'm just looking at your Estimate which is down from the Forecast and if you look at 2001-02, the Estimate was way down compared to what the Actual was. Then in 2002-03, the Estimate again was considerably lower than the Forecast, so I'm just curious as to this number. It's about $2 million from the Forecast of the previous year. I'm just wondering what your thinking is there. Is there a specific reason why or are you just batting low?
MR. BALSER: I guess if you look at the Forecast, which would be year-end 2002-03 to a projection, we've brought it much more closer in line to the Actual.
MR. MACDONELL: I would agree.
MR. BALSER: So I think the budgeting - you know, analysis and work it through as best you can. Grants, by their very virtue, are subject to some level of discretion so is the ability there to be accountable? If you look at our year-end in terms of the department, we are very fiscally responsible. I would say the $17 million to the $15 million is a reasonable reflection. You can debate why $10 million became $17 million. There may have been extenuating circumstances.
MR. MACDONELL: I guess I could debate it because I have you to debate it with. I'm curious if you can give me some of those extenuating circumstances.
MR. BALSER: There was a change in program where $4 million was reallocated. That's perhaps reflective of what happened when $13 million went to $19 million. On Page 3.7, if you look at the Grants and Contributions, under Industry Development and Business Services, you'll see the Estimate of $5.3 million became $1.3 million.
MR. MACDONELL: So that move from there to this line item which brought that $10 million up to $17 million - that's the major part - about $4 million. It's obviously a difference of nearly $3 million there.
MR. BALSER: That's also reflective of the APF, the Agriculture Policy Framework funding.
MR. MACDONELL: Okay. I'm curious - what's the difference between a grant and a contribution?
MR. BALSER: I would suspect that a grant is discretionary. A contribution may be something that's required. That would be the quick answer, but we can dig deeper if you like. As I said, we went down a list of grants not that long ago where we said, there is the light- horse fair, the contribution to the exhibitions and those kinds of things. The difficulty is, sometimes grants, as a result of repetitive allocations, there's a line item in somebody's budget saying provincial contribution, so a grant becomes a contribution. They are basically programs. The business risk management program would be $3.2 million, the crop and livestock insurance is $200,000, the policy framework is $4 million, the innovation fund is $3 million.
MR. MACDONELL: So, are those grants or contributions?
MR. BALSER: They are programs that the industry applies for so they would be contributions. Whereas a grant would be, as I say . . .
MR. MACDONELL: Okay. I'm wondering, does contribution just mean that you're not covering the whole cost but you're contributing?
MR. BALSER: Some of these programs would be cost shared with the federal government, there would be participation there particularly on the business management side of things. Again, innovation fund would be something that would lever federal dollars.
MR. MACDONELL: I'm curious, has the province signed onto the new federal safety net agreement?
MR. BALSER: What we did is, in principle agreed to work forward, that our final signature would require an analysis of the final document and as I indicated to the previous questioner, the Canadian Agriculture Federation had initially requested of the federal
minister a third-party analysis of the program to determine whether or not it met their needs and concerns. The federal minister indicated he was willing to do that, was moving forward. At the last I saw a copy of correspondence generated by the president of the federation and they had significant reservations and had withdrawn their endorsement of that.
Because so much time has transpired and because I believe there's general consensus, we need to deal with this whole issue of ad hoc program support. The provinces are prepared to move ahead. The federal minister has indicated that he would undertake the third-party analysis. That information will be made available to the provinces. Quebec has been very, very reluctant to have any kind of buy-in at all. They have continued to sit at the table. They've continued to provide input, but they have withdrawn their endorsement of the outcome at this juncture, which is unfortunate. Saskatchewan as a province was very reluctant initially and at the last conference call, that minister spoke most vehemently and directly about the need to proceed.
I think the biggest challenge faced by the industry - there are a myriad of challenges, but in terms of having a consistent policy that you can understand - one of the biggest shortcomings I've seen in my short time involved in this sector is the ad hocery that exists. Invariably, if there's a challenge, the view is that the government - whether provincial or federal or whoever - has to step forward with funding to address that particular situation. So what happens is you have - and we saw it clearly with the pork industry. In 1998 there was a crisis and the government of the day brought in a program and we had a crisis in the industry recently and the government of the day, this one, brought in a program.
The two programs were not similar. One was, by and large, to be blunt, a grant. While it was initially envisioned that there would be repayment, it didn't happen. The current program is clearly structured as a loan with triggers to see repayment occur. By the same token, it's still an ad hoc solution. The maple growers had the issue in Cumberland County with storm damage. They approached the province saying you have to put forward $0.25 million in the form of a grant to assist us through this difficulty. The department didn't have that kind of money available to it, but we did have existing programs that we were prepared to work through.
I think that it's incumbent on all of us - the federal and the provincial governments - to say, here are the rules, they will be consistently applied and you have to make decisions as a business person, related to the amount of risk you're willing to accept. So the NISA program will be part of that because it's an income stabilization program, it's not a retirement program. They can then, hopefully, acquire insurance coverage through an enhanced insurance program. We've had a number of conversations about that.
I think it's interesting for me and as the new guy, you should be a little careful about what you say, but it would appear that historically, the agricultural community did not like the old program.
MR. MACDONELL: I would agree with that.
MR. BALSER: Okay, and now they have a new program on the horizon and it would appear that they like the old program, but they don't like the new program. So, you wonder at what point do you say, this is the program, this is where we're going. It's clear the federal minister has said that. He was very direct in his conversations with us as ministers the other day. Will it address all the needs? I doubt it, but I think it has the potential to be a tremendous improvement because there's a great deal of money being allocated for research and development. There are a lot of pieces to this, beyond simply the policy framework.
MR. MACDONELL: Well, in the five years I've known you, I'm impressed as to how much you talk like a politician.
[8:30 p.m.]
MR. BALSER: It's the nature of the business we're in, you too.
MR. MACDONELL: The fact that you have ad hocery coming up with programs when you supposedly have a safety net program should be a clear indication that that program doesn't work. Why not listen to the industry and see what they would be willing to fashion, because if you're going to say, well, now they like the old program, that's only because it's the best of two evils. If this program is worse than the last one, and they like the last one now when they never liked it before, there's a real message in that.
What the industry would really like to have is some type of risk management program that could be applied across all commodities, if that's possible, and even when it came to the predicament that the pork industry was in last Fall, they said, we would like a risk management program similar to the previous program that we had where the producer and the processor and the government chipped in equal amounts into a fund, which was more quickly accessed by those in need. The whole application process around trying to hit your NISA account was based on when your year-end was, and some people had money in their accounts they couldn't get access to, which is a ridiculous thing.
I don't think that the industry - when you guys signed the papers, they're going to have to take what you guys give them, but to me, signing on to something that's not going to work anyway is kind of a ridiculous path to go down. My understanding right now is that what's going to happen in this new safety net program - and you correct me if I'm wrong - is that the producers are going to put money into this program, but the federal government and the provincial government are not going to match that and there's not going to be any money put in by governments until somebody is entitled to draw out of that account. Is that right? To me, the governments are not really allocating any funds to this program.
MR. BALSER: A couple of things, definitely allocating funds, two or three things you brought up there, in terms of the program to provide relief for the pork industry. I guess I take a bit of umbrage to your comments in terms of how quickly that program was turned around. We did meet with the representatives of Pork Nova Scotia, spoke specifically to their concerns, and they seemed to go away reasonably satisfied that the Farm Loan Board was processing the loans as quickly as possible. Sometimes there were issues well beyond the need for the issue of the pork producers' immediate problem. There were sometimes issues of the entire financing package for the farm.
In terms of NISA accounts, the interesting thing about those is that they were designed or envisioned to be an income stabilization program, not a retirement program. There are many, many farmers in Canada who have used the NISA account as a retirement program, and in times of downturn have chosen not to access their NISA account because they felt if they were able to lobby effectively with government that government would create an ad hoc program that would provide relief and leave their NISA account intact. So they, to some degree, were not embracing the purpose and intent of NISA.
So what the new program is designed to do is clear up any of those misapprehensions about what the purpose of NISA is. The purpose of a NISA account is to provide income stabilization through cyclical turns in the industry, not to be a retirement program. As such, the contributions by the federal and provincial governments will be made on the way out of the program or when there is a need.
As the old program existed, we contributed and the money was created in a retirement fund for farmers, not everyone has accessed that, but certainly it would be my observation that historic NISA accounts were not being utilized in the way in which they were intended and envisioned. The reason for that was because historically the agricultural community was able to lobby effectively for ad hoc program relief. To be blunt, going back to the maple syrup producers, we did not have $0.25 million to provide an ad hoc program, curiously enough, in a digression - and this is no criticism of the industry, but it's learned behaviour.
When I met with the maple syrup producers, they talked about one of the best programs that had existed in the Department of Agriculture was the $75,000 annual grant that was made to that sector, commodity group, to help grow the industry. Well, not having been there at that time, I suspect that $75,000 in the form of a grant would be a good program, especially if you were able to access it.
MR. MACDONELL: I'm not sure if you misinterpreted something I said. I don't think I was critical of the government in the ad hoc program that it came up with. In other words, I was advocating for something, so I don't think I was critical when the government came across with something. The speed with which the department dealt with each farmer around the Farm Loan Board or whatever, that wasn't an issue that I raised, I was raising the fact that they had trouble accessing the money in their NISA account, the way the NISA
accounts are set up. That was my issue. I think that if the farmers could access their account more easily, then you wouldn't find what you refer to as using it as a retirement fund. If they needed it and could get it in a month, they would be using it. But if it takes six months or longer to get it and they need it now, then that's not something that's going to work for them.
We just talked about $4 million to an aquaculture facility, a $4 million loss to this province. I don't know what the number was. I know a few years ago, back in 1998, when the hog industry asked for a loan, it was somewhere around $6 million, if I remember right. Am I wrong there, do you remember? We're talking about the whole industry wanting $6 million, which from my understanding, when the people said it wasn't paid back, in turned out that was federal dollars or the province could have accessed federal dollars, because actually they should have come on board to fill that need there. To say that they didn't pay it back, I don't think is entirely appropriate.
If we look at farm gate sales of over $400 million, and you've already stated what the level of loans are, $26 million to the industry, they're generating pretty good value. I think $400 million at the farm gate, that's not including the indirect sales outside, which generates into over $1 billion. Yet, in terms of economic development, we can compare Orenda in Debert, what they've gotten from the province, compared to this industry where people are here to stay and committed 30 and 40 years of their lives in this agricultural sector. To me, we've been nickel-and-diming them on a risk management program that they are perfectly willing to contribute to.
Even when you spoke to the honourable member for Clare, around the losses to the Farm Loan Board, what did you say, 2 per cent, something like that? The agricultural community has not been a drain on this province in that regard, if that's the level of loss. So $600,000 on $24 million or whatever. I think they've actually stepped up to the plate lots of times to ensure that the taxpayers are not on the hook. I don't really get the impression that the province has really been willing to step up to the plate with them and say, what do you guys think would work, because we want to minimize what tax dollars we're going to put into this program. Give us a way to do that.
Otherwise, this program, it may work, you might be right. The federal government and the province might be right on this one, but I think they will only be right on it if the ability to access the funds is improved. If the time of need is the time you can get it, then I would say there's a possibility - and as long as at that time of withdrawal the federal government and the provincial government put money in place for that particular producer, maybe Joe Smith is going to get it but Frank Jones, for whatever reason, may not be entitled, depending on what the circumstances may be.
There are people who are financial gurus, far and beyond me. Certainly I would say if we look at the assets of this industry, what it generates in the province and the small level that it's left the province on the hook in regard to loans to the industry, then I think their
reputation here is far greater than lots of other companies that come from away that we have given money to and gotten nothing for, and I would say fairly significant levels of dollars. So I'm not sure why everybody is so shy when it comes to really dealing in a business way with agriculture. Am I totally off base on this, do you think?
MR. BALSER: Not at all, I think what we're certainly attempting to do is deal with the agricultural sector on a business basis. A couple of things, in terms of the engagement of the agricultural sector in the discussions about NISA, I can tell you that Brian Johnson has spent hours in meetings talking with the Federation of Agriculture representatives saying what is it that you're looking for, trying to engage them in discussions about what this would look like, has been very forthcoming in terms of presenting information that the federal government had generated vis-à-vis the changes to ensure that the industry, to the best degree possible, was part of the development of the new program. Certainly from the departmental perspective, there has not been a policy initiative developed in agriculture in the last 50 years that had the kind of consultation and engagement at the federal and provincial levels that the APF have had.
In a perfect world everyone would buy in and endorse it. In terms of loans, you spoke of loans, and the intent purpose of the Farm Loan Board is to try to support the agricultural industry in providing access to capital when it makes good business sense. If you look at the loan portfolio, you've referenced a couple of times the failure of Scotia Rainbow, there were reasons why the province embarked upon that.
You were talking about an area with 30 per cent to 40 per cent unemployment and very little economic opportunity, a proponent who had a history in the aquaculture industry, it seemed to be a reasonable investment. Unfortunately, not all investments turn out. The fact that at the end of the day the decision was made to put it into receivership and try to recover your investment and move on, those kinds of business decisions are made all the time. It would be nice to have a great deal more capital available to support the agriculture industry or the fisheries or any number of institutions but, beyond that, if you look at Nova Scotia's economic growth, we had an economic growth rate in this province second only to Alberta, last year. It is not about the current government, it's about the kinds of policies and frameworks that are put in place over time so that companies can come and invest.
You talked about companies coming here as carpetbaggers, if you will. I can tell you that companies have a myriad of choices about where they will invest their monies, and if you're not prepared, as a province and as a government, to assist them in making a determination, they will go somewhere else.
Just last week the Premier announced 1,500 jobs. That came because the province, the jurisdiction where those jobs are going to be located, worked together. So I make no apologies for that kind of initiative. Do I believe that the agriculture sector could have tremendous growth potential? Yes, I do, but I also think that the sector has to spend a lot
more time looking at where they want to go. It's not industry versus government. It's not about the government inventing bad policy to jam it down their throats. It's about engaging on a real level where discussions can occur. We've talked about the Agricultural College, and 91 per cent of those kids get a job six months out.
If I were you, or anyone, I would say to young people that you better start looking at the agriculture sector. If you look at the Fortune 500 leading Canadian industrialists and look at their portfolio in terms of where they have generated wealth, a great many of them have significant holdings in the agricultural sector. So are we underplaying the potential of this sector? Absolutely, and that's something that this department has to take head-on, and the federal government as well.
MR. MACDONELL: Gee, I don't have an argument. I agree, I just don't see it in these numbers. I just don't see any great amount of money going - there could be possibly 50 people trying to be new entrants in this industry.
MR. BALSER: Absolutely.
MR. MACDONELL: But I bet if we look at the amount of dollars that will be available in an easy way to them compared to carpetbaggers, who we encourage to come here, that there will be a vast difference and these are people who are here. That's the part that has me baffled, that somehow call centres with tax breaks are better than people who are Nova Scotians who have been here with no tax breaks.
[8:45 p.m.]
MR. BALSER: If I could, no one is saying that call centres are better. What we're saying is that you have to have a diversified economy. The whole process, in terms of where monies will be expended in terms of supporting farmers, just to put things in context, about $3 million for the safety net program; about $3 million for income support; Farm Resource Management and Innovation Fund, about $3 million; programs, grants, about $4 million. So we are making contributions, and it's easy to say there should be more money for agriculture, there should be more money for fisheries, the question that would obviously spring from that is where does it come from?
On the floor of the Legislature, any number of times we've been questioned about borrowing money for capital programs, borrowing money; the budget for Health is about $2 billion. We have a $5.6 billion budget. If you take $2 million out for Health, you take $900 million out to service the debt, you take $1 billion out for Education, and you take $1 billion - give or take - for Community Services, you're right, Agriculture is underfunded, but where do you find that money? It's constantly an issue of making choices with scarce resources.
One of the things that's really interesting, to digress a bit, my experience in Economic Development, particularly on the aquaculture side, you would see a company get started with assistance from their own resources and maybe some support from the Fisheries Loan Board, you would see them then come to Economic Development once they got far enough along that they were having cash flow problems. A lot of our leading agricultural sector processors, whether it's Sarsfield, or Oxford, or wherever, they have some linkages back to Economic Development. So I think what you need to do is say that if this sector is important, how do we put programs in place that are going to help them? I agree wholeheartedly with that.
MR. MACDONELL: I agree, too. I never get the impression that agriculture is really looked at in terms of economic development, as an economic engine for the province. Other businesses are, and I mentioned Orenda, which I think got $9 million of Nova Scotia's money. Well, that's almost the total of the $3 million, plus $3 million, plus $4 million that you mentioned to the whole agricultural industry. That went to one company that's not even a Nova Scotia company. If you were going to say where are we going to get the money, there's where you get the money. You don't do things like that. You put it into people who are here. That would be my first analysis of it.
I don't want to lose my train of thought of here. I want to take up a comment, I guess, and I will go in a different direction than the honourable member for Clare. I think you mentioned Brand Nova Scotia, local produce or local commodities being used and marketed away as well, identifying them as Nova Scotia, but I'm really wondering about access for Nova Scotia farmers to Nova Scotia institutions, to government institutions. I think this was a promise made in the blue book by your government, that there would be access to hospitals, prisons, whatever else, House of Assembly, that Nova Scotia farmers would really have processed goods produced locally, but I don't see that that has ever actually happened in this province in any significant way. I'm sure it adds up to millions of dollars to keep these facilities going. So I'm just wondering where you're at with that. Are you aware that that has taken off in any significant way?
MR. BALSER: Certainly that was the intention and the intent of the Brand Nova Scotia initiative. We've moved forward on a number of fronts in terms of making available, on-line, the opportunity to bid for contracts. It comes back to the world being a particularly competitive place, that Nova Scotian companies have to be competitive and, certainly from the perspective of quality of products that exists, there is a need to improve it.
We're making inroads, but it's a slow process. Every time a company fails to secure a bid, they point to any reason that springs to mind. I'm not saying that there's not some validity to saying have we got access to these bidding opportunities, and the answer is yes, they're listed on the Web site, I understand. I believe that putting $790,000 into the Brand Nova Scotia initiative will help move that along.
MR. MACDONELL: But if you were going to get beef, does that have to come from a federally-inspected facility to be used in our institutions here?
MR. BALSER: I would assume it would have to be. That's an assumption on my part.
MR. MACDONELL: Where is the closest federally-inspected facility?
MR. BALSER: We will have to check on that, but the deputy was just saying that he thought if it was used internally that it would not necessarily have to be a federally-inspected institution. We will verify that.
MR. MACDONELL: Then, what we're really saying, for some reason then that either Nova Scotians aren't able to either produce the quality or produce it at a price that our competitors do, and that means shipping it in here as well, adding that cost to the price, and we're still not competitive. I would think that somebody would be looking at that and saying, what do we need to do to give our people a competitive edge on our own contracts? The food preparation or the food produced for our hospitals, doesn't that come from away?
MR. BALSER: For which?
MR. MACDONELL: For hospitals here, isn't that shipped in here? Food servings are shipped in from away for our hospitals.
MR. BALSER: I don't know that for sure.
MR. MACDONELL: You don't know that?
MR. BALSER: No.
MR. MACDONELL: Could you find that out for me?
MR. BALSER: Yes, I certainly will. All of it?
MR. MACDONELL: That's my understanding. I know the cattle producers in this province, the beef producers in particular, are pretty concerned. We produce 14 per cent of the beef we consume in Nova Scotia. So 86 per cent comes from away. I have spoken to some people in the Cattlemen's Association and they've said they can produce beef as good a quality and as cheap as they can anywhere. So I said, okay, why aren't you? Well, their analysis was they didn't have enough animals to actually fill an ongoing demand. Sobeys would want to know that next week that they're going to have a carcass that's the same size and shape and weight as the one - Grade A or whatever. I disagreed. I don't think they're
getting the price they need in order to make money. If they were going to make money, people would be going into it like any other business.
There is some talk about building a facility, an abattoir on Prince Edward Island right now. Has the province indicated that they're willing to put any money toward this or to help the cattlemen in this regard, or do you see this as a positive thing to be doing anyway?
MR. BALSER: Well, it certainly has potential. The whole issue that Atlantic Brand Beef, which was going to be a high-end, high-grade beef, in order to have it work effectively you had to have the critical mass for an abattoir. It was determined that P.E.I. would be the location for that. We're looking at where that is. They're going to have to have access to 500 head of cattle a day to make that work effectively. Within the industry, you talked about production levels, we're not entirely convinced that that level of production exists at the quality level.
MR. MACDONELL: I know it doesn't.
MR. BALSER: So, you have a challenge there. I guess your comment about such a significant percentage of beef coming from outside the province, the reality is there are jurisdictions where they don't have the kinds of seasonal challenges you have here. The fact is that you have to make hay, you have to have silage, you have to have feed, you have to have some place for the animals to get in out of the weather. If you look at jurisdictions where they have mild climate year-round, they have a significant competitive advantage. That's why a great deal of beef is imported from areas like Argentina and other jurisdictions.
MR. MACDONELL: Where they have no labour cost to speak of.
MR. BALSER: So the reality is we have some disadvantages. How do we differentiate ourselves in the marketplace? You do it by creating this Atlantic Brand Beef initiative, you use Brand Nova Scotia, you try to encourage consumers to pay a premium for locally-produced product, if that's what's required. But that takes a great deal of education on the part of consumers.
I will digress a moment and talk about a previous life. Wind energy has all of the cache of being environmentally friendly and all of those kinds of things. My counterpart in British Columbia, thinking that B.C. wanted to move forward because there had been a great hue and cry about the need to be aware of environmental concerns, his initiative was to mount wind turbines on some of the islands in the Queen Charlotte Strait where there is a significant environmental lobby. The curiosity was that when they announced that they were going to locate those wind turbines in close proximity to some of the leading proponents of the environmental lobby, they refused. They also found that when they indicated that, yes, on your electric energy bill there would be a premium specific to wind power, the consumer said I don't think so.
So you have, notionally, the idea that people will pay a premium to support indigenous - whether it's beef, pork, chicken, the reality is the consumer has changed dramatically and I think, to some degree, the agricultural industry has not kept pace with the consumer. If you look at the local retail outlets, the amount of floor space that's now devoted to frozen, individual portion servings versus what was the norm 10, 15 years ago, the consumer will dictate what they want the producer to produce and, in the absence of that, the producer will be left wanting.
I had a group of farmers from Australia here, as part of the Neufeld program, and that was one of the things they pointed to. They said that in Australia, New Zealand and Tasmania, their retail food outlets have not reached that point. They were quite curious about where their industry would be five years out. They were looking at us and saying, you guys are there, we will come to that point.
Back to the point about how do you get people convinced that first of all we can produce beef competitively in comparison to New Zealand or to Argentina, I would like to see the numbers. That's not to say that our farmers are not creative and innovative enough to do it, I'm just saying that there are lots of challenges.
MR. CHAIRMAN: I would just like to advise the honourable member for Hants East that your hour has passed, also to advise the honourable minister that the Liberals had agreed to the remaining eight minutes, the continuation of this particular question period, and invite you back tomorrow afternoon after Question Period, approximately 1:30 p.m.
So I would like to continue with the questioning, I just wanted to advise you of the times. (Interruptions) We are here until 9:05 p.m., a four-hour duration.
MR. MACDONELL: Mr. Minister, I think I was pretty okay with a lot of comments you said, even if I disagree, but your last ones around the beef industry, I'm worried. We can grow grass here like probably no other place in Canada. We have a beef industry in Alberta that's selling beef in the United States market, selling beef here. Their rainfall is so minimal. The Prairies, the reason it's grassland is because it doesn't have enough rain to grow trees. One thing we can do here - and I live in an area which has the Shubenacadie River Valley, the honourable member for Colchester-Musquodoboit Valley is in the Musquodoboit River Valley - if there's any area in this province that can grow forages, we can do it.
The dairy industry in my constituency produces 30 per cent of the milk in this province in that one constituency. If you think that those people haven't honed that to a science to cut their costs - because they're worried about a lot of things, free trade is one, and attack on supply management in that has them down to the point of trying to be so efficient. The last time I saw a calf being born, it wasn't born in portions, it was the whole animal. You said the consumer wants to buy certain cuts in certain ways, well, you do that after you kill them. So that technology and the market for that, that's there. I mean, we can vacuum pack
it, we can do whatever the market demands. We can enter that market and I think we can be quite competitive.
[9:00 p.m.]
The price to the farmer has to go up and that doesn't mean the price on the shelf will have to go up, that the consumer will have to pay any more, I think the consumer is paying enough to see that the farmer gets it. It has never been distributed equally in this country. The one thing you haven't mentioned is some type of marketing board that would allow for beef producers to actually have some mechanism to try, because I know under free trade agreements now you can't set up supply management, but you can set up marketing boards. So I think there probably are mechanisms, if you want to investigate them, to try to see that you can get the best price to the producer based on their cost of production. If they can make money, they will be growing beef in Nova Scotia to meet that 86 per cent demand that's coming in.
Your comments around the facility in P.E.I., saying they need 500 carcasses a year, or whatever, you're probably right on that. I haven't seen those numbers and I will take your numbers. That's something that they can ease into, as long as the quality is there - if they're paid based on the fact that their carcass is a Triple A, or whatever, or if they get docked because it's not the right quality, you will see farmers heading toward efficiencies. They will be trying to produce those carcasses that pay the best return to them, but there's definitely going to be a time lag. If we don't have the animals now, it's going to be awhile, maybe a few years, but that doesn't mean that we still can't have other animals coming in here to fill that market as we generally, over time, progressively take up more and more of that market share so that eventually there will be very little coming from away and Nova Scotia producers will be producing it all.
I don't see that happening overnight, but I see it as a real possibility. I think beef producers here can be as competitive as anybody. We have the knowledge on the genetics. If you guys will fund and pay the Nappan Research Station, they can still be that way. All of these things are connected and I think the industry is going to need some support, but the biggest support it's going to need is some ability to get a decent price for what they produce. If producers can do that, you just got to get out of their way. They will go into agriculture and invest like anybody else does in any other sector of the industry or any other industry.
Argentina has been around a long time, but people here have been producing beef for a long time. If they can produce it in the West and ship it here, I certainly think that we could probably produce it and be competitive right here and fill our own market. If it's true that that has a value of roughly $80 million, that's what's being brought in here, then that's almost to the level of the dairy sector, and what that would mean to rural Nova Scotia would be extremely significant in terms of what goes back to this province in its coffers. So generating
wealth has a definite positive effect for the province and I think the investment is worth putting into.
I will wind up my comments, Mr. Minister, and say thank you again. I will quiz you tomorrow.
MR. BALSER: In terms of some of the comments you made about the ability to produce a top quality hay product, it's true, but, by the same token, I've had a number of discussions about the possibility of developing an export market for timothy for the horse industry, and the real challenge there is that there is a significant market for that type of product in the Eastern Seaboard of the U.S.; in fact, in the Caribbean Basin as well. The challenge we've had is that we cannot get the level of production of prime quality hay consistently, to ensure that you would have enough product moving into the market to supply the demand. There have been a number of attempts, some less successful than others, but right now we have an entrepreneur who has been doing this on his own and we're working with him. In spite of what you say, and I do agree we have the right kind of climate conditions, but it is about making sure that the proponents of the industry and practitioners in the industry know clearly what it's all about and how to go about it properly.
In terms of the beef sector, I think it does have potential. I think the potential to some degree is in niche opportunities. I met with some people who are developing a very good champion breed of beef cattle and they have a real niche opportunity, they're growing the sector. I would like to see the abattoir in P.E.I. move forward. I think you're right, it does have potential but, as you said, the people in the industry have been doing it a long time, and it seems like it's a very difficult nut to crack. I grew up on a beef farm, we don't do it any more because there was no money in it. I don't know where the answer is.
MR. CHAIRMAN: The time has expired. By the Rules of this House, we have reached our four hours. We stand adjourned until tomorrow after Question Period. We anticipate being here by 1:30 p.m. for the continuation of debate on the estimates of the Minister of Agriculture and Fisheries. At that time, the Liberal caucus will be starting the next hour. Thank you.
We stand adjourned.
[9:06 p.m. The subcommittee rose.]
