Martial Asselin (Speaker pro tempore)
Shall all questions stand?
Subtopic: QUESTIONS ON THE ORDER PAPER
Shall all questions stand?
Mr. Vic Althouse (Humboldt-Lake Centre) moved:
That this House urges the Government to take immediate action to address the financial needs of Canada's farmers by immediately:
(1) declaring a moratorium on bankruptcy and foreclosure proceedings;
(2) establishing a debt review agency to act as a neutral third party between borrower and lender with power to change repayment schedules and to reduce the accumulated interest; and
(3) setting out a clear mandate for the Farm Credit Corporation in order that it can make viable, low-interest loans through Agribonds or other means for farmers, including such financing for operating credit over the first five years of the loan,
and further, that a farm incomes policy based upon a guarantee of production costs for domestically used farm products be implemented to provide parity pricing for Canada's farmers.
He said: Mr. Speaker, I rise in support of the Opposition motion that has been put today. Our motion recognizes the extreme hardship in which Canadian farmers have been placed over the last several years.
This is not a situation that has suddenly faced us. It has taken years for this situation to develop. It has taken years of neglect by the public sector and, I suspect, years of neglect by the consumers of Canada as well. At any rate, right now in November, 1984 we are faced with a situation in which one in five of the viable farms of this country is facing severe financial hardship. For most of these farms, the situation will end in either bankruptcy or foreclosure.
The information that we have now departs radically from the information that we were being fed through official sources during the past year. A year ago the banks pooh-poohed the circumstances of Canada's farmers. Bankers said: "Oh, it is not so bad as all that. Perhaps only 5 per cent of farmers are in trouble". Even the then Minister of Agriculture suggested that perhaps the banks' estimate was just a bit low.
We now have a report prepared by the Farm Credit Corporation which did a fairly thorough survey of farms. The Farm Credit Corporation reports that in fact a total of some 39,000 or almost one in five farmers are indeed in severe financial distress. The report defines that by pointing out that a farmer is in severe financial distress when interest payments exceed 40 per cent of a farmer's total sales revenue or when the net worth of the farm is less than 15 per cent of its total assets.
That criterion is not particular stringent, Mr. Speaker. I am sure a great many farmers whose interest payments exceed 30 per cent of their total sales revenues are also having great difficulty surviving and I am sure that farmers whose net worth is 20 per cent or 30 per cent of their total assets are also facing great difficulty. However, using that criteria, the Farm Credit Corporation has arrived at a figure of nearly 20 per cent of farmers who are in difficulty.
November 23, 1984
As of October, there were 465 official farm bankruptcies. That is up almost 20 per cent from the same period last year. More important, the total debt load of farmers continues to increase. It is now in excess of $21 billion, an increase of $1 billion over last year. In addition to that, the assets farmers have to place against that debt load have been reduced by $4 billion, indicating that machinery is depreciating and not being replaced but mostly indicating that land values are going down in response to the economic realities facing farmers.
I have been raising this question in the House for the last four years, ever since I became a member of the House of Commons. I must repeat again something I have repeated many times in this House because there has been no change in the situation. In 1974, 10 years ago, the net income of Canadian farmers was $3.5 billion. This year, in spite of inflation and in spite of the fact that the cost of running a farm has gone up by more than three times, we are looking at an expected net farm income of $3.4 billion. While the rest of the economy has been able to keep up with inflation to some extent by keeping incomes in line with costs, farm net income has taken a real cut of 300 per cent. Farmers have one-third the net income they had in 1974. No wonder farmers are in great difficulty.
I submit that knowing that, Hon. Members must take quick and immediate action. For that reason, we have proposed for debate and I hope for the serious consideration of Government members today the immediate declaration of a moratorium on bankruptcy and foreclosure proceedings. There should be a moratorium on not only those proceedings that are under review by the Farm Credit Corporation. The Minister has already placed a moratorium on those few hundred bankruptcies until January 15, 1985. After that point in time there is no clear indication from the Government where those particular farmers will go. The Government will have seen them through Christmas and have avoided the embarrassment of pushing farmers off their farms during the Christmas season. However, there is no indication what the Government is proposing to do after January 15.
We feel it is time for the Government to take immediate action and establish the debt review board, which was often mentioned during the election campaign. The Government should establish the debt review board to act as a mutual third party between borrowers and lenders. The Bank Act, which was passed in 1981-82 with the concurrence of both the Liberal and the Conservative Parties, no longer gave consideration to farmers. Banks decide when a bankruptcy should occur. The banks place the receivers into position. In effect, the receivers are working for the banks. Therefore, farmers feel that there is no recourse. There is no third party in the process, which is mutual. The farmer is always short-changed.
To begin with, farmers do not have enough money. They cannot afford to hire a lawyer-if a lawyer can be found who will act against the banks. In addition, lawyers could not be certain of payment and are therefore loath to take on such
cases. It is clear discrimination, which has placed great pressure on farmers and their families. I think it is time that we recognized the pressure which has been placed on the people in rural areas.
The people who are isolated are the farm wives. They are the partners in the farms. In many cases they have no one to talk to other than their husbands. Over the last four or five years, some of them have recognized the great pressure which they and their families are under. Some of them have set up network groups which have become prominent in various parts of Canada. There is a group in Prince Edward Island, one in eastern Ontario and another in the Grey-Bruce area. In addition, some have developed on the Prairies. The National Farmers Union has a special women's group which has looked into these problems over the last number of years.
The problems which emanate from the financial pressures show themselves in several ways-many of which are predictable. Those pressures often result in drinking and family squabbles which may involve the beating of spouses and children. There is no place for these people to turn for help. Often the pressures result in murder and suicide.
The amount of income available to farm families has been reduced from the 1974 period, when over 40 per cent of the sales which the farm made resulted in net income. At the current time, approximately 15 per cent of total sales may result in net income. There is great pressure to produce more and to sell more. Meanwhile, the costs have increased three to four times since 1974. Essentially, farm families are being asked to live on the same income which they had ten years ago.
This situation is not forced on any other group, yet the Government and the provinces-because the provinces have some jurisdiction in this area-have not taken proper account of the terrible pressures under which we have placed these people.
As the resolution indicates, immediate action must be taken to put in place a moratorium which will provide a third party to review cases in order that they can be dealt with clearly and fairly. There must also be a clear mandate given to the Farm Credit Corporation, hopefully before January 15, in order for it to be able to handle these cases and provide the means to set out repayment schedules that will make it possible for farmers to remain in business. Otherwise, Canada will lose 20 per cent of its rural population over the next year and we will no longer have viable organizations in rural Canada.
This resolution also calls for the Government to set out immediately to attack the whole farm incomes problem by implementing a system of guarantees for production costs on domestically-used farm products. Steps have been taken in this regard with several products. Eight or ten years ago guarantees were implemented for dairy farmers. Dairy farmers receive a guarantee on the cost of production of an efficient unit for their milk and the milk that goes into other dairy products. A similar arrangement has been established for products which are included in national marketing plans with supply management. Egg producers receive a guarantee on their basic production costs as part of their pricing formula.
November 23, 1984
Poultry producers, who produce broilers or turkeys, also have a similar set of guidelines and rules for establishing their prices. However, for the remainder of the commodities produced in rural Canada, the market has produced very low returns for farm families.
The inadequacies of the market indicate that immediate stabilization programs are required to recognize the cost of production as a base for the pay-outs, rather than an inadequate market, which is the current method of deciding whether pay-outs under stabilization should be made. There must be either a change to the stabilization programs or a change in the marketing systems to ensure that producers will be guaranteed the full cost of production for the products which will be sold.
1 have outlined the resolution quite briefly and succintly. I could spend all afternoon discussing the way this situation has been affecting farmers and their families. However, I will only mention one very typical case. There are many more cases listed in the Farm Credit Corporation's study which are very similar to this case.
This case is not as emotionally telling as some, because the young farmer involved is not married and has no dependants. However, it will give an idea of the kind of pressures that have been created and the kind of giving that has occurred in farm families. In this particular case, the parents provided a security of a half section of land for their son, along with $130,000 to enable him to buy additional land. The irony is that he had the assistance of an agriculturalist from one of the banks helping him set up his operation. They took the half section of land and the $130,000 and purchased nine quarter sections of land in northern Saskatchewan. It was agreed that he would pay approximately $75,000 twice a year as payment and interest. Why an agricultural specialist would make that recommendation I do not know. It is virtually impossible to generate those kinds of funds with that size of operation. However, the farmer and his parents were told that it was a viable operation.
Predictably, after having run the operation for two and a half years, and having paid this extra $400,000 to the bank, they are now losing everything. There goes a lifetime of work for the mother and father who have no retirement funds because their land and money were given as security in order to help their son. That family has now lost everything it had for two full generations. That is just one of the less unfortunate stories we could tell here.
Action must be taken immediately, Mr. Speaker. I urge the Government to declare a moratorium not just on Farm Credit Corporation cases which are in front of it, but an immediate moratorium on all bankruptcies and foreclosure proceedings until such time as an incomes policy can be brought forward which will ensure that farm families can survive in this country of ours. If something is not done, about 20 per cent of them will be forced into bankruptcy within the next year.
The Acting Speaker (Mr. Charest):
Questions or comments?
Mr. Speaker, I was very interested in the comments of my colleague, the Hon. Member for Humboldt-Lake Centre (Mr. Althouse), regarding the situation of farm women, having talked to a number of these women in my contacts with women's groups across the country. The Hon. Member referred particularly to the isolation of women who are living in rural areas and carrying a very heavy work load. I am told that with the increasing economic stress, it is not unusual for farm women not only to carry on the traditional role of wife and mother and help with the farm work in peak seasons, but to carry another load, either part-time or full-time work in town, in order to pay off debts or to provide cash flow during tough times.
Could the Hon. Member indicate whether or not this is becoming a fairly general situation? This is more evidence of the stress rural families face, particularly rural women. Could the Hon. Member also indicate whether there is any trend now to provide more financial recognition of the contribution of farm women? I am particularly thinking of the situation where farm women have an income as, perhaps, a member of a company, or an employee. Is there a trend towards splitting pensions as well?
Yes, Mr. Speaker, I can report that the number of farm wives who have off-the-farm jobs has always been fairly high and has increased substantially over the last number of years. I do not have accurate data in front of me but I do know that there is a statistically significant increase of off-the-farm jobs for farm women. This creates further pressure within the family.
It attempts to alleviate some of the financial pressure but it means that child care has become the responsibility of the family. Often times in rural areas there are no day care facilities available. It is quite common for pre-school children, in particular, to accompany their father around the farm as he does his farm work. They ride in tractors and occasionally get hung up in grain-moving or haying equipment. There are reports virtually every harvest season of children being killed or maimed in that type of equipment. This happens in part because one of their parents has to work off the farm and the remaining spouse is left to do the farm work and look after the children at the same time.
Facilities for day care in rural areas are virtually non-existent unless there is a grandmother or an in-law to help look after the children. In many cases, however, the financial situation has reached a point where most of these persons are putting their shoulder to the wheel as well, trying to keep the farm operation going by doing farm work.
Mr. Speaker, would my hon. colleague comment on one part of his motion, which is the reduction of accumulated interest and the change of payments. This accumulated interest appears to be a major problem. Does the Hon. Member have any comments as to what can be done?
November 23, 1984
Mr. Speaker, I believe this is one of the key powers which a debt review agency must have when it sets itself up between the lender and the borrower. It must be able to extend the repayment schedule, but even that is not enough power. It must also be able to set aside some of the accumulated interest.
The reason most of these farmers are in financial difficulty generally goes back to the extremely high interest rates which existed in 1981 and 1982. Some of these people were paying 22 per cent to 24 per cent interest. That interest accumulated and they had to borrow in order to keep paying the interest on the interest. The banks, in my opinion, have been fairly adequately compensated with those interest rates. I feel that in the interests of keeping the Canadian agricultural economy going, a debt review agency should have the power to reduce some of that accumulated interest as part of the repayment scheduling which is set out as an answer for the particular problem with which it is dealing.
The Acting Speaker (Mr. Charest):
If there are no other questions and comments, we will move on to the next speaker.
Mr. Speaker, it is customary and almost a tradition that in a debate of this kind, the Official Opposition is entitled to present its comments; the Hon. Member for G1 engarry-Prescott-Russel 1 (Mr. Boudria) was ready. However, 1 understand that the Minister of Agriculture (Mr. Wise) has an important engagement this afternoon, and we agree to allowing the Minister to rise in the House before the Member for Glengarry-Prescott-Russell.
The Acting Speaker (Mr. Charest):
Thank you. The Hon. Minister of Agriculture.
Hon. John Wise (Minister of Agriculture):
I would like to express through you, Mr. Speaker, my appreciation for the co-operation given to me by the Hon. Member for Ottawa-Vanier (Mr. Gauthier) and, particularly, to my long time friend and acquaintance, the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). Indeed, we are not setting a precedent. I acknowledge on the record that I am speaking second only through the kindness and courtesy of my colleagues across the floor. 1 appreciate their co-operation because it will allow me to keep my commitment to meet with some farm organizations later this afternoon.
I would like to congratulate the Hon. Member for Hum-boldt-Lake Centre (Mr. Althouse) for bringing forth his motion today. It provides us with, I would say, one of those all too few occasions in the past, when we can discuss important issues in this Chamber and bring these problems to the attention of other areas across the country. I think we would all have to agree that, if past records were looked at, it would be found that the occasions were all too few when we could bring to the attention of the House, to the Government and, indeed,
to the country, the serious problems which we face in the agri-food industry.
Having made those comments, Mr. Speaker, I would like to say that as Minister of Agriculture I represent roughly some 318,000 of the most important businessmen and women in this country. These 318,000 persons make a significant contribution to the Canadian economy. They are Canada's 318,000 farmers.
Together our farmers form the basis of an agricultural industry that generates about one-sixth of all economic activity in Canada. It is a giant industry with a huge growth potential. It is also an industry with some very, very serious problems, the most serious of which is low and declining farm income. Out of 318,000 farmers it is estimated that a relatively small but very significant number, perhaps as high as 17 per cent, are experiencing serious financial problems. This fact, revealed in a recent survey by the Farm Credit Corporation, is distressing, particularly so because these financially troubled farmers tend to be younger operators. They are bright young people who started or expanded their operations during the optimistic 1970s. The FCC survey also showed that generally these farmers, the ones with low equity and a high debt burden, are among the most productive, indeed the most efficient, producers that we have. These people we will depend on for abundant supplies of food in the future. As a matter of public policy we cannot afford to lose tomorrow's farmers to today's high production costs.
The federal Government recently announced a number of steps to help strengthen the farm sector. First we have the three cents per litre fuel tax rebate for gasoline and diesel fuel purchased for off-farm highway use. In addition, a further rebate of 1.8 cents per litre will be given to offset the increase in the petroleum compensation charge. These rebates will put between $90 million and $100 million into the hands of Canadian farmers next year. This will help a great deal to lower farmers' production costs and improve their profit margins.
Secondly, Mr. Speaker, Parliament will soon be considering several major agriculture taxation issues. Hopefully the Government will be able to act on the results of the parliamentary study for the next fiscal year. The third priority is the establishment of a new voluntary stabilization plan for red meat producers, a plan that would help the producers remove the peaks and valleys in their income and help them raise cattle with greater assurance of longer term profitability.
More important than all these initiatives is the Government's commitment to deal with the immediate financial difficulties of this nation's farmers. This has been the focus of most of my work since being reappointed as this country's Minister of Agriculture some two months ago, and it will continue to be at the top of my priorities in the coming weeks.
It was suggested by the Hon. Member for Humboldt-Lake Centre that the federal Government should declare a moratorium on bankruptcy and foreclosure proceedings. I am afraid he
November 23, 1984
is a couple of weeks late with that suggestion because two weeks ago I instructed the FCC to suspend loan foreclosures until early next year. This action gives the Government time to take a closer look at the farmers' problems and, more importantly, decide what programs would offer reasonable solutions and be affordable at this time when our resources are extremely limited. To extend such a moratorium beyond the FCC so as to apply to all bankruptcies and foreclosures would require an Act of Parliament. Moreover, it could very well have the effect of jeopardizing the private farm lending market.
I remind the Flon. Member of the moratorium on farm bankruptcies more than 50 years ago during the great Depression. That action drove away virtually all private sources of farm financing and eventually resulted in the establishment of the FCC. It was not until the 1970s, some four decades later, that the banks again became active in long-term lending to farmers. Insurance companies, I might add, were so soured by this experience that they still have not returned to the farm financing market. That is a lesson we should not forget.
At the same time I point out that the Canadian banks deserve credit for their efforts to be accommodating in at least those cases where the lender believes there is a promise of good management to rebuild farm equity. The banks are not getting much publicity for these actions but every week private lenders are writing down farm loans, believe it or not, and some of us who are involved in cases between our constituents and the lending institutions will have to face that. Not everyone is cut out to be a farmer, Mr. Speaker. Nor can all farmers facing bankruptcy and foreclosure be saved. Let us face the facts. A farm is a business and must be able to compete. There are potentially good operators who just need some time to get on to firmer financial footing and there are others who will always keep sliding backwards.
I have met with the provincial Ministers of Agriculture to discuss the alternatives for helping those farmers who can be saved. On November 7 and November 8 we met in Toronto to review the report of the task force on farm finances. A number of proposals came out of that meeting and they include extending the FCC's special Farm Assistance Program to provide debt consolidation loans and interest reduction to farmers in difficulty; expanding the advance payments for crop legislation to areas beyond that covered by the Canadian Wheat Board; establishing a registered farm investment fund; extending the Small Business Bond Program to 1989; permitting farmers with bonds coming due to negotiate new bonds; and amending the Farm Improvement Loans Act to allow for fixed rates of interest on intermediate term credit. We discussed a number of proposals that would involve changes to the Farm Credit Act and we discussed ways of improving co-operation with our private lenders.
Although a number of other proposals were considered, the common thread running through all of our discussions was the need for co-operative action. The solution to the farm credit problem in Canada does not lie solely with the federal Government or the provinces or the lending institutions. We must all
work together co-operatively to ensure the future of Canada's food supply.
During the election campaign a number of commitments were made to the farmers of this country and I have already discussed the action which has been taken on several of them. The 4.3 cents a litre rebate on farm fuels will offer Canadian farmers about $100 million next year in tax relief. We promised tax relief on farm fuels and indeed we have delivered. In the Minister of Finance's economic statement there was reference to Section 31 of the Income Tax Act, the capital gains tax, and the subject of agri-bonds, all of which were referred to a parliamentary committee for study. It should be noted, however, that any changes to these tax measures will be retroactive to the 1984 tax year. Again, we are moving along on our commitments.
As well, the Hon. Member for Humboldt-Lake Centre has called for the establishment of a debt review agency. During the election campaign my colleagues and I recommended the establishment of a farm finances review board to act as a neutral third party between the borrower and lender. However, to establish such a review board legislation is required. I would also caution the Hon. Member that the establishment of a debt review board agency would have to be done carefully and responsibly. If not, we could run the risk, as in the case of the broad moratorium, of scaring private lenders out of the marketplace.
We have, Mr. Speaker, taken several other actions towards the fulfilment of our commitment to improve the financial situation of the Canadian farm community. My colleague, the Minister of State responsible for the Canadian Wheat Board (Mr. Mayer), has announced a final payment of $123 million under the Western Grain Stabilization Act, bringing the total payment for the 1983-84 crop year to $223 million. This payment was welcomed by western farmers and is a positive step towards relieving some of the financial pressures which they are experiencing.
We have announced assistance in the order of $60 million under the Canada-Alberta-Saskatchewan-Manitoba Prairie Livestock Drought Assistance Program. This federal-provincial program will help producers maintain their livestock herds in the face of serious drought problems experienced this year. By assisting the farmers in these areas to maintain their existing herds, we have made the coming years more secure for many farmers.
During the election campaign we promised to include tobacco in the National Farm Products Marketing Act to allow farmers in the tobacco industry a marketing board with supply management powers if they so choose. Yesterday I was happy to see that all Members of the House were co-operative in giving the Canadian tobacco producers that option. I hope that the Senate will act in the same manner.
Another commitment which we are fulfilling is the one made to the Ontario grape producers. In concert with the Province of Ontario we are working toward fulfilling the
November 23, 1984
commitment to purchase Ontario grapes. During the election campaign we spoke of the need for fair and equitable treatment of all commodity groups across Canada. We pointed out that in the case of advance payments the previous government doubled payment levels for western grain but neglected commodities in the other parts of Canada. As I indicated earlier, we are moving through the normal channels to introduce amendments to the Advance Payments for Crops Program.
We have also recognized the deficiency of the Agricultural Stabilization Act and have recognized that tripartite stabilization offers the best opportunity for improvement. Again, we are moving ahead with that commitment and I hope soon to be able to bring this legislation forward. When I say soon, I mean within a matter of days.
With a $35 billion deficit hanging over our heads this year, it is important to recognize the fact that the manoeuvring room of the Government is severely limited. For this reason, it is incumbent on all of us, as responsible representatives of the Canadian public, to ensure that any expenditures are carefully weighed and considered. We are committed to developing fiscally responsible methods of assisting the agricultural community.
I have only touched on a number of the areas in which we have made significant progress in the very short time that I have been in office. With regard to some of the suggestions that were raised by my hon. friend, the Member for Hum-boldt-Lake Centre, I can assure him that in the very near future we will be in a position to make some very major and significant decisions as to what we can do with and without legislative authority and what we can do in the best interests of Canadian agriculture with the resources we have available to us.
Mr. Speaker, the Minister of Agriculture (Mr. Wise) is such a thoroughly nice and decent man that I can hardly get over his being so hard-hearted. There was a previous 1.8 cents a litre refund on farm fuel tax. The Minister's Government has raised that by another three cents which will be collected from the farmers. As I understood it, the Government is then going to pay rebates of $90 million to $100 million, unless the Minister plans to give all the farmers a blanket exemption from paying the tax in the first place.
Is it not correct, Mr. Speaker, that that is not new money for farmers? They are either not going to pay a tax or they are going to get a refund on a tax they have already paid. Therefore, there is no additional money there.
My second point is about the grain stabilization pay-out of $123 million or $130 million. Once again, that is the farmers' own money. The farmers have already contributed over $300 million into the grain stabilization fund and the Government is not going to give them even that much back. What is the Government doing with the farmers' money? There is nearly $1 billion in the grain stabilization fund and the Government is going to give them back $130 million. That is not additional money from the Government. It is not costing the Government anything. Why is there such a low pay-out from the grain
stabilization fund? At least give the farmers back their own money, which amounts to more than twice as much as the Government now proposes to give them.
Mr. Speaker, I cannot assure the Hon. Member that my response will be completely accurate with reference to his first question regarding the farm fuel rebate tax. However, it is my understanding that that tax is taken off from the source so it is in fact of significant benefit to Canadian farmers. A number of people have made representations that it would be better to do away with the rebate process as well. However, if one looks at the mechanics involved one will see that we can hardly get out of the rebate business and ensure that the tax savings will flow to the primary producers, the people in mining, fisheries, or forestry. At the moment that appears to be the only tax method which can be utilized by the Government to ensure that some $100 million will flow to the benefit of Canadian farmers.
The Government is determined to maximize every opportunity, with the financial resources which are available to it, to ensure that every possible benefit does flow to primary producers. In the opinion of the Government this is the best way to approach the matter. If this were tallied up, I believe it would show a benefit to Canadian agricultural producers in the vicinity of 25 cents or 26 cents a gallon.
It makes them no better off.
The Hon. Member says that it makes them no better off. I cannot agree with him because if we had made a decision not to carry on with the rebate program or not to introduce these two new measures, then they would be worse off by about $100 million. That is not what we want.
The Hon. Member said that the western grain stabilization plan is a very good plan, as we all know. We know that farmers contributed one-third into the plan. One-third of any payments made out of the fund would be producers' money. However, I well remember the debate which took place last June during the committee hearings. An amendment was made last year to allow an interim payment to be made. I attended that committee hearing and my colleagues and I introduced an amendment which indicated that that amendment should not be only a one-shoat deal but should become a permanent feature of that Bill. All the members on the committee agreed that it should not be a one-shot deal but should authorize the Minister to make an interim payment in years thereafter.
Even though we were united in that the government of the day rejected it and we are now back in the situation-
Will you bring it in again?
You have heard me talk about it in earlier speeches. You have heard my colleague, the Minister of State for the Canadian Wheat Board, give a very positive indication. We are looking at every possible way in which we can provide financial benefits to Canadian farmers. Given the limited resources that we have, we must look at the western grain
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stabilization fund as a way to deliver additional dollars to farmers in the spring of the year to enable them to improve their financial position to buy-