Hon. John Wise (Minister of Agriculture):

Mr. Speaker, I have the responsibility to table the Annual Report of the Farm Credit Corporation in two official languages, and I hope to make a statement in the House in a few moments.

[ Translation]

Mr. Richard Grise (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):

Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to 10 petitions numbered as follows: 332-4995 to 3325000 inclusive and 332-5003 to 332-5006 inclusive.

[Editor's Note: See today's Votes and Proceedings.]

Hon. John Wise (Minister of Agriculture):

Mr. Speaker, I indicated only a few moments ago that I was intending to make a statement in the House with reference to the annual report of the Farm Credit Corporation. The document, upon study, really contains no surprises for those who have been following agricultural events over the last five or 10 years. The Farm Credit Corporation is reporting major losses again this year. It is important for Canadians to understand how the

Farm Credit Corporation got into this situation in the first place and it is important as well to understand how this Government intends to bring the Farm Credit Corporation back onto sound financial footings.

In the 1970s, the so-called experts made a number of predictions that affected, and affected very seriously, many conventional or traditional lending institutions, and they also made some predictions that had a very severe impact especially on the Farm Credit Corporation. The so-called experts indicated and sent out messages to the effect that interest rates would remain stable. They said that energy costs would remain stable. They said that the inflation rate would remain stable. They said that we would be going through a time, now in the mid-eighties and beyond, of world shortages in food supply. They also said that we would be going through a period of time in our history when commodity prices would be reaching alltime high levels. Obviously, they were wrong on all accounts.

At that time, farmers were encouraged to borrow money to buy land and to expand their operations. By the mid-1970s, the Farm Credit Corporation could not supply credit to meet the demands. In 1975, the Farm Credit Corporation Act was revised to provide 100 per cent of the market value on security of the collateral for the loan.

Again, between 1972 and 1983, loan limits were increased five times to keep up with the inflation of the farm asset value. The lending decisions were made on market expectations that just did not materialize. The widely available credit resulted in heavy borrowing and the farm debt shot up from $4.6 billion in 1971 to $18.6 billion in 1981.

Then in the early 1980s, interest rates shot up. In fact, they increased by about 12 per cent to reach record highs of some 22 per cent or 23 per cent. For farmers, each percentage point represents an additional cost of about $150 million. That increase in interest rates of 12 per cent was a direct input cost to Canadian farmers of nearly $2 billion.

At the same time, commodity prices dropped, especially for grains. Incomes dropped and so did farm asset values drop by nearly $20 billion. Farmers with high debt loads were crippled and the Farm Credit Corporation became a lender of last resort. The Farm Credit Corporation found itself serving clients who owed more than the sale of their land could possibly recover.

July 21, 1988

Statements by Ministers

[DOT] (mo)

Today we see the result of all those factors. Some 96 per cent of all FCC arrears today relate to those loans made prior to 1984. That was a direct result of the conditions during that period of time, and last year the FCC lost $511.8 million.

This Government has made it a priority to restore order to FCC policies and put the corporation back on its feet. These measures include a moratorium on foreclosures in 1984 and 1985; an $80 million interest rate reduction program in 1985; a shared risk mortgage introduced in 1985; farm debt review legislation was passed; farm debt review boards were established. As a matter of interest, a recent survey showed that 74 per cent of those who have used the boards are satisfied with the process. As well, we put in place the Canadian Rural Transition Program and also amended and enhanced the Farm Improvements Loans Act.

Last December, the Prime Minister (Mr. Mulroney) announced that this Government would provide $100 million to help cover FCC losses. More assistance was given to the corporation to allow it to participate fully in the farm debt review process. We put in new managers at the corporation and gave them the responsibility and the challenge of developing a recovery plan. Today, I am announcing that this Government will contribute another $400 million as part of that recovery plan. We will be injecting more money into FCC over the next three years.

The message we are sending out today on behalf of the Government is the fact that the FCC is here and here to stay. This Government stands firmly behind the corporation and is helping to solve its financial problems. This new money will ensure that FCC continues to serve farmers, and a healthier corporation means better service to farmers.

The corporation's role has also been clarified. Its primary job is to provide long-term mortgage credit to Canadian farmers on a break-even basis. It will be an alternative source of credit to average risk farmers, as well as those who represent a marginally higher risk but who have significant potential for commercial viability. These measures will ensure that our farmers have a reliable source of long-term credit when they need it, and that future FCC clients will not be penalized by past corporate losses. These measures also ensure that the corporation will be able to offer competitive interest rates.

Today's financial recovery plan is only the latest evidence of this Government's commitment to Canadian agriculture. In the last four years we undertook initiatives worth nearly $10 billion to our agri-food industry. We made record payments under the Special Canadian Grains Program, stabilization programs, drought assistance programs, and the list goes on. Our record on agriculture is second to none. We stand squarely behind Canadian farmers. We are determined to put the Farm Credit Corporation on a financially sound basis. We will

ensure that it continues to provide long-term credit to Canadian farmers.

Some Hon. Mlembers: Hear, hear!

Mr. Don Boudria (Glengarry-Prescott-Russell):

Mr. Speaker, it has been said before that never has so much been said about so little, the "so little" being of course the action of the Government in its assistance to agriculture.

The Government today prides itself on having bailed out the Farm Credit Corporation after it allowed it to go broke to start with. The Tories applaud the fact that the Government has, a year after the FCC was technically broke, bailed it out and put it back on the footing on which it should have been all along. We are supposed to be very grateful for this.

I was thinking this morning that the Government was going to come into this House and tell us about a massive program of assistance for farmers. I thought the announcement that the Minister was going to make on the FCC would include such things as that the corporation's current losses would be supported by the Government on a long-term basis. I thought the Government would say the FCC would play a brand new and innovative role in the development of financial services for farmers. I hoped to hear the Government would recognize the need for a policy role for the FCC and would commit itself to compensate the corporation for the losses it incurs while developing these policies. I was hoping to hear the Minister tell us today that the FCC would establish a brand new set of programs for beginning farmers and set standards for management skills of beginning farmers, that it would recycle FCC properties and recycle them for beginning farmers. Those are the kinds of things I was hoping to hear the Minister say this morning, but I did not hear any of them.

I was hoping to hear as well that the federal Government was finally going to bail out the FCC from the poor condition it allowed it to get into. Of course I was hoping that. That is the least the Government could do. As usual the Government did the very least it could have done.

I listened with great attention and read the Minister's speech, and I thank him for having the courtesy to provide me with a copy some minutes ago. I was wondering whether it would be delivered by the Minister. I will just refresh your memory on what the Minister just said. He said:

This Government has made it a priority to restore order to FCC policies-

Order? It allowed the FCC to go broke! Is that what you call order? It has to be Tory order but it is not logical order and it is certainly not farm order. Farmers do not run their businesses that way.

The Government says it initiated a number of things such as a moratorium on farm foreclosures. The Government says it initiated farm debt review measures and so on. I am glad to see the Minister listened to some of the suggestions made by Ralph Ferguson and others in the past.

Mr. Wise:

Ralph who?

July 21, 1988

Mr. Boudria:

1 am sure Ralph is proud of the fact that he suggested some of these things. However, when the Minister copies something like that he should put a note at the bottom and extend the proper courtesy to the people who made these suggestions in the past.

Mr. Wise:

Ralph could not do it.

Mr. Boudria:

If one does not do that, then it is plagiarism. We would not want to accuse the Minister of that.

One of the most important things 1 read in this statement today is this very short sentence:

FCC is here to stay.

That is an important statement. It is probably more important than anything else in the Minister's speech this morning. That statement is symbolically important for all farmers. It is my hope that the Government and the Minister mean what they say in that statement. It means the FCC has to exist as something other than a name. An organization which is broke now and has been broke for almost a year is not exactly something that looks as though it were here to stay.

I urge the Minister not only to provide the funding today which will satisfy the FCC for the short term because it has this huge backlog of cases to deal with but, more important, to make a commitment that the Government, and any future Government, will not allow the FCC to go broke as the Minister and his Government have done.

I know that the time afforded to us is very limited. That is unfortunate because I could go on and on talking about agriculture and the sad record of the Government in supporting agriculture. The Government has failed to convince its friend, the United States of America with whom it is trying to sign a trade deal, to stop this war on subsidies which has caused the prices of agricultural commodities to go down so much and which has caused so many of the problems we have today. The Government has failed miserably in that regard.

We must remember as well that the excess farm debt at the present in this country is $22 billion. There is $22 billion of excess debt which farmers will never be able to handle. As a matter of fact, the Standing Committee on Agriculture will be reporting on that issue and making a number of recommendations which I cannot reveal, obviously, because they have not yet been reported to the House and I, of course, would never leak the contents of a committee report.

The Minister said, "Our record on agriculture is second to none". What he should have said is, "Our record on agriculture is none to second".

Mr. Stan J. Hovdebo (Prince Albert):

Mr. Speaker, it is amazing how an impending election can bring a tottering Government out of the doldrums and get it to make decisions, statements, announcements of funds which are suddenly available for a variety of reasons-which funds were probably going to be available anyway in some cases-or the re-

Statements by Ministers

announcement of funds that have already been announced and put in place.

Much of the Minister's statement dealt with the history of the Farm Credit Corporation. History is important to know and to learn from. However, it has little value to the credit-starved farmers looking for assistance. The deficit situation of the Farm Credit Corporation is a direct result of decisions made by the previous Government. That Government decided to find money on the market rather than use the money available through the Government.

The Minister indicated that he was going to announce a recovery plan, but failed to do so. The deficit of the Farm Credit Corporation was allowed to grow and the corporation almost reached the situation of being no longer viable. A bailout was necessary. Last December, $100 million was announced and the $400 million announced today covers part of the deficit, but it does not put the Farm Credit Corporation into a position where it can return to the role for which it was originally established. That is something the Minister will have to do before the effect of this money will be felt by the farmers.

There are thousands of farmers in very difficult straits. This so-called recovery plan will give them no more hope of survival. There are a couple of things which this recovery plan could have done which it did not do. For instance, it made no attempt to shield the farmers from high interest rates. The Government has been supporting the increase in interest rates by a Bank of Canada policy which is already affecting the survival of farmers who require credit to continue operating. Interest rates are on the rise to such an extent that they are a factor in the elimination of more farmers each year. This so-called recovery plan contains no protection for farmers in that regard.

It failed to announce the quality or quantity of funds which would be available for lending to farmers in the future. The fact that there are thousands of farmers who need credit now and need a plan to keep them on the farms is not going to be affected by the putting into place of enough money to bring the Farm Credit Corporation out of a deficit position.

Third, as long as the Farm Credit Corporation operates as a bank it will continue to abandon the thousands of farmers who need action for their survival. As long as the Farm Credit Corporation continues to be just another bank it will not help those farmers.

In the past the Farm Credit Corporation has been a very important factor in agriculture, and it can be so again. It must be so again. However, the recovery plan which the Minister suggests he is putting in place, which I suppose could be called a non-recovery plan, will not do much toward establishing a comprehensive structure which would allow farmers to survive, farmers getting into agriculture, to have a source of funds without having to go to the banks and take the kinds of risks which were taken in the past, and to allow able farmers to continue in their present structure.

July 21, 1988

Committee Reports

I am glad that the Farm Credit Corporation is going to be able to eliminate part of its deficit. However, we need answers about how the Farm Credit Corporation will operate relative to farmers in the future. Those are the kinds of answers the Minister did not give in his statement.

I hope the Minister will follow through on the position he has taken and give us, in the very near future, a comprehensive plan for the Farm Credit Corporation so that farmers will have some security about the availability of credit and the price they will have to pay for that credit.

Mr. Alan Redway (York East):

Mr. Speaker, in my role as an urban farmer, being a member of the East York Garden Club, 1 have the honour to present, in both official languages, the seventh report of the Standing Committee on Agriculture relating to Bill C-132, an Act to amend the Western Grain Stabilization Act.

In that same role, Mr. Speaker, I have the honour as well to present the eighth report of the Standing Committee on Agriculture relating to Bill C-112, an Act to amend the Canada Grains Act and other Acts in consequence thereof, also in both official languages which, of course, are the official languages of the East York Garden Club.

[Editor's Note: See today's Votes and Proceedings],

Hon. Doug Lewis (for the Minister of National Health and Welfare) moved

for leave to introduce Bill C-143, an Act to establish the Canadian Centre on Substance Abuse.