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HALIFAX, MONDAY, APRIL 26, 2004
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
3:04 P.M.
CHAIRMAN
Mr. William Dooks
MR. CHAIRMAN: I would like to welcome everyone here today, members of government, Opposition and staff members. We're starting this afternoon, at approximately 3:05 p.m., the estimates. I would like to call the estimates of the Department of Agriculture and Fisheries. Mr. Minister, you have one hour for your opening comments and remarks, and if you should finish up before that time, that's fine. At that time, we will turn it over to the members for questioning. Members, it's one hour in turn for questioning.
Resolution E1 - Resolved, that a sum not exceeding $40,796,000 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 and the Nova Scotia Fisheries and Aquaculture Loan Board be approved.
MR. CHAIRMAN: The honourable Minister of Agriculture and Fisheries.
HON. CHRISTOPHER D'ENTREMONT: Mr. Chairman, it's my pleasure to be here today to talk about the Department of Agriculture and Fisheries. Before I begin, I would like to take a minute to introduce my staff who are here with me today; Daniel Graham, Deputy Minister, and for my Finance CSU, we have Weldon Myers. I'm going to try to keep this as brief as I can. I will probably table a couple of pieces for your indulgence, to try to save this up a little bit so we have more time for questions.
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Today we'll outline the challenges and opportunities facing the Nova Scotia Department of Agriculture and Fisheries, and more specifically address how, through our proposed budget, we will address some of the issues and seize some opportunities. The agriculture, aquaculture and fisheries sectors are significant economic drivers in Nova Scotia's rural and coastal areas. These industries are not just a way to do business, but a way of life for many generations in Nova Scotia. With time, we're getting better at it, we're getting more productive, and our products are garnering a high-quality reputation. This doesn't mean that we are not without challenges, however, and we have experienced many in this last year.
Economic growth, environment impacts, food safety, livestock health and education are concerns that impact and shape the future of these resource sectors. The unplanned, such as this year's unique weather, has challenged our agriculture, aquaculture and fisheries sectors. September's Hurricane Juan and February's snow blizzard both left their marks. We continue to rebuilt, restore and move forward from Mother Nature's wrath. Nor could we foresee the impact of international, national and provincial food safety and bio-security issues. We continue to experience the fallout of bovine spongiform encephalopathy, the Avian flu and MSX.
In an effort to address these overall challenges, the department has set out strategic priorities and initiatives to seize emerging opportunities. As we enter the new fiscal year, the department is engaged in policy initiatives that will provide guidance and shape the future of both our aquaculture, agriculture and fishing sectors. The province is fully engaged in the Agriculture Policy Framework, or APF. The APF is a federal-provincial-territorial effort, which sets a new strategic framework for agriculture over the next five years and beyond. This umbrella accord establishes a common action plan that centres on five areas: environment; food safety and food quality; science and innovation; renewal; and business risk management. Implementation of the APF commenced this past fiscal year.
Nova Scotia continues to benefit from a strong commercial fishery, which is vital to the economy of our coastal communities. Over the next year, the department will continue its participation in a national fisheries policy review. This policy review sets the direction for long-term management of marine resources. The Aquaculture Policy Framework released by the federal government sets a longer-term vision for Canada's aquaculture industry. The department continues to work with the federal Department of Fisheries and Oceans to move this important sector forward. It focuses on environmental monitoring and the development of a new national aquatic animal health program. Nova Scotia prides itself on a successful sport fishing industry. The department continues to work with its federal, provincial and municipal counterparts, as well as many volunteers to develop agreements on freshwater fish habitat and recreational fisheries.
Economic stability and growth continues to be the common goal in the agriculture and fishing industries. Despite challenges, these resource industries remain crucial to the future of Nova Scotia's economy, primarily because of efforts targeting growth and innovation.
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Agriculture, commercial and recreational fishing, aquaculture and related businesses are the economic base of our rural and coastal regions, employing over 28,000 Nova Scotians and contributing some $2 billion to the provincial economy.
Close to 4,000 farms produced $416 million in farm cash receipts in 2003. Seafood continues to dominate Nova Scotia's exports, posting a new record of almost $1.2 billion in 2002. The combined foreign exports of the Nova Scotia food manufacturing industry, the fishing industry and agriculture, total $1.1 billion. Nova Scotia's food manufacturers made direct export shipments to 79 countries last year, and the value of aquaculture farm-gate sales increased by 30 per cent, from $28 million last year to $40 million this year. There are about 4,000 people employed in agriculture, related manufacturing, and 1,000 in agricultural services.
Mr. Chairman, I would like to table the government's corporate plan, as relates to the Department of Agriculture and Fisheries. Our department's strategic goals, in accordance with its mission and legislated mandate, the Department of Agriculture and Fisheries will continue to work towards sustainable and environmentally-responsible development of Nova Scotia's agriculture and fishing industries; a competitive business climate that encourages economic growth and job creation in Nova Scotia's rural and coastal communities; orderly development of agriculture, aquaculture and fisheries through a regulatory regime, which supports business and sector growth, and which ensures consumer confidence in food safety; globally competitive Nova Scotia workforce through education, training, research and community services; and public services that are accountable and serve to meet identified industry needs.
Again, Mr. Chairman, I would like to table some more departmental priorities. I can take some time to talk about our agriculture industry. A central focus has been the APF. This is a federal-provincial-territorial government initiative. Statistics of the census released last year show there have been significant increases over the last five years. Agriculture does have its ongoing challenges, such as keeping up with technology, farm labour, farm debt, changing demographics, urbanization of rural areas. More recent challenges within the agriculture sector deal with BSE, livestock health, bio-security, branding, weather, processing plant closures and adjustment to the new BRM programs.
The department, through invested provincial funding, has the potential to provide assistance of $36.3 million to the agriculture industry in support of the 2003 production year. In addition, there are $28 million in NISA accounts, which we have invested, along with the federal government and participating producers. The department continues to work with EMO to access flood damage to provincial infrastructure as a result of last March's floods. We were able to get critical in-stream provincial infrastructure repaired in the Upper Stewiacke and Antigonish areas. The farmland damage claims are being handled by EMO, with technical advice being provided by the department.
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The province committed $10 million to help farmers, foresters and fishermen affected by Hurricane Juan. The province also implemented or this was the enhanced disaster relief program to help farmers. Through our various development programs, such as the Farm Investment Fund, Agrifood Industry Development Fund and the Technology Development Program, the department provided almost $5.5 million. Through our BSE program, in response to the BSE Task Force, the department provided $8 million of which $1.6 million will be provided through the CAIS Program.
As the only province in Canada to provide a second year of bridge funding to help producers transition to the new BRM programs, the department paid out $2.5 million. Under the new CAIS Program, the department committed $5.1 million, attracting a potential $7.6 million, federally dependent upon producer participation. Under the CFIP, the department paid out a cost-shared amount of $3.2 million. We also offered $600,000 to the New Entrants Program, which provided forgiveness on loans.
With regard to the pork industry, the department offered a Hog Loan Support Program totalling $4 million. Again, in December 2003, the government approved a $3.5 million loan in response to the hog industry's request for assistance while market prices returned to normal values. Over 30 loan applications were received for a total of $2.3 million committed. I'm pleased to note that the market price is rebounding. To further assist the pork industry, the department will be meeting with the board of Pork Nova Scotia in May to talk about a strategic plan for the industry as it looks into the future.
The occurrence of BSE in western Canada - there has been some serious disruption in the cattle and beef markets. A comprehensive package of support programs has been delivered to all the segments of the ruminant livestock industry as a result of the BSE issue. These programs provide in excess of $8 million to the sector. A recent announcement of the federal transition income support program will provide an additional $4.4 million in income support, bringing the total in Nova Scotia to $12.4 million. This amount exceeds the amount of $10 million that was recommended by my BSE Task Force. On that note, I would like to recognize the BSE Task Force members and the participants at the various public meetings for their work.
While there will continue to be impacts in 2004, there have been some positive developments in the cattle industry, which includes the export of boneless beef to over a dozen countries, slaughter cattle volumes are running at about pre-BSE levels. Recently, on Friday or Thursday, there was an announcement that bone meat will be allowed into the U.S. market. As well, consumer confidence in our country's beef remains very strong. The department is also involved in a recently-announced branding initiative by the Office of Economic Development. Premier Hamm is actively pursuing a buy-local initiative with his colleagues through the Atlantic Council of Premiers.
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With regard to the Avian flu, the department is participating in the national Communications' efforts on this poultry disease. We would remind producers to practise on-farm bio-security measures and have delivered these measures through direct letters to producers. With regard to the environmental issues of spreading biosolids on farmland, we await the results of the Department of Environment and Labour's review of this practice. The department remains committed to the agricultural industry, and the 2004-05 budget ensures that programs and services will be maintained and delivered.
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Now I would like to speak to the Fisheries sector. Nova Scotia continues to lead Canada in export fish and seafood products, the dollar values exceeding almost $1.2 billion in 2003. The U.S. market remains the primary destination of our fish and seafood products. This is followed by Japan, France, China, Denmark and Belgium. Thousands of people are employed in the seafood processing industry here in Nova Scotia. The aquaculture industry alone employs about 1,200, both full- and part-time jobs. Our inland recreational fishery generates millions and helps our tourism industry.
In 2002, the provincial crab fishery had a landed value of $73 million. The exports were valued at over $153 million in 2003. We expect the value to increase this year, as we do the employment associated with this sector of the fishery. The offshore scallop fishery is the largest scallop fishery in Canada. In recent years, annual landings range from 50,000 metric tonnes to 90,000 metric tonnes, with an estimated value of $69 million to $121 million. Aquaculture product is worth almost $40 million. The export value of lobster is around $441 million.
As we see strong markets in our boat-building industry, the value of our boat-building industry has doubled in recent years. The industry's annual sales increased 60 per cent to $80 million, while total exports increased threefold to $45 million. However, as in agriculture, the fishery has its challenges. Some of these challenges are helping new fishermen getting into the industry, First Nation negotiations, a downturn in the groundfish sector, water issues around access equality, illegal fishing activities and maintaining processing facilities.
In addition to these, there are concerns about access to water, particularly when it relates to aquaculture sites and oil and gas exploration. There are many competing interests and the department believes there is a successful way for all interests to exist and prosper. The MSX disease in oysters found in the Bras d'Or Lakes has been a real challenge for growers and, as a result of federal restrictions on oyster movement, has caused significant hardships for oyster farmers who are unable to move their oysters from seed locations to their farm sites. While this is not a human health risk, it is serious for our growers. The department has committed $25,000 to our industry to study the science of MSX, so we can better understand the parasite and its movement. As well, the department is committing another $25,000 to industry partners to re-seed oysters in the affected areas.
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The government continues to be committed to addressing the illegal trade of fish and fish products by increasing fisheries enforcement efforts. All regions are being monitored through the joint efforts of our department and the Department of DFO, CCRA and CFIA. The 2004 fish buyer and fish processor licences have been issued. For the first time licence holders will be requested to collect the harvest licence number of fishermen that they are buying from. This will be a term and condition of the licence in 2005. The licence conditions are tools of enforcement used by the department to address proper management in the movement of fish.
This past year, the department sponsored a fishing representative fact-finding mission to Norway and Scotland, to learn how conflicting issues of fishing and oil and gas coexist. A report with recommendations was recently presented to me at the ministers' fish conference. DFO released its policy framework for the management of fisheries on Atlantic Canada's coasts on March 25th. We are still awaiting DFO's response to the issue of owner/operators as identified in the consultation phases. The department continues its efforts with DFO to negotiate an MOU on fish habitat. We are the leader in working with volunteers to restore degraded fish habitat, and want to eliminate red tape and simplify the process for undertaking habitat restoration. The department has been engaged in dialogue with industry and federal government on many concerns over the last year. We will continue in this vein to help our entire fish sector.
There have been a few developments this past year in regard to Nova Scotia products. With regard to moving our shipments of food products, the province has been participating in a U.S.-Canada working group to facilitate the movement of our seafood in particular. The concerns were widely shared by the U.S. food businesses and organizations, and an interim final regulation addressed the major trade concerns for prior notice. Full implementation and enforcement will start in August, and we trust that our seafood will cross the border in the time required to maintain its quality and its price.
A National Wine Standards Committee was established in 2002, and they've developed draft standards. We do not believe that the present draft reflects the interests of the Canadian wine industry as a whole, and the department continues to have discussions with other provinces in an effort to clarify the concerns regarding the issues around competitiveness and quality.
Now I would like to address the department's 2004-05 business plan. The department will continue to address external pressures related to the environment, industry growth, food safety, and education and training through the APF. The signing of the Canada-Nova Scotia Implementation Agreement for the Agriculture Policy Framework represents a milestone for addressing the major challenges impacting the agriculture and agrifood sector. The following captures the major challenges that will be addressed in the 2004-05 business plan.
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Environmental issues related to water, air and soil quality continue to present significant challenges. As part of this commitment to climate change, the department is working with industry, government agencies and academia to coordinate initiatives aimed at mitigating greenhouse gases. The department recognizes the importance of responding to these and other environmental concerns, and is working with industry to balance development with environmental and social responsibility.
Agriculture and fisheries are recognized as foundation industries and play a key role in advancing the government's broad economic growth agenda, and opportunities for prosperity. Food safety issues itensified in 2003-04, due to concerns with bovine spongiform encephalopathy. Markets and consumers seek assurances that the food they purchase is safe and of high quality. To respond to this challenge, the department must address issues of production and product standards, food labelling and traceability, monitoring and inspection, bio-security protocols, food-handling education, and analytical testing.
Implementing food safety programs under the Canada-Nova Scotia Implementation Agreement for the APF, as well as the integrated food safety system, will enable Nova Scotia to brand its food products as meeting standards of quality and safety, and will sharpen its competitive edge in domestic and export markets. Education and training will continue to be a focus for 2004-05, particularly as the government addresses labour market needs through the Skills Nova Scotia Framework initiative. This initiative will provide ongoing opportunities for Nova Scotians to keep their skills current and responsive to changes in the labour market.
One of the biggest opportunities for our department is the APF. I wish to explain to you some of what the APF means to us and where we see our programs fitting under this national program. To address challenges facing our farmers, Nova Scotia is working with the Government of Canada, other provinces and territorial governments to lay a foundation for a stronger agriculture and agri-food sector now and in the future. Through the Agriculture Policy Framework, governments are setting out a plan that will make Canada the world leader in food safety, quality, environmentally-responsible production and innovation.
In June 2002, the Government of Canada and the Government of Nova Scotia signed a framework agreement on agriculture and agri-food in the 21st Century. This agreement shows the commitment of these governments to work together on the development and adjustment of programs, services and tools to help producers succeed today and tomorrow. It also identified the common goals they will pursue over the next five years. There are five elements of the APF - and I think I'll table those in a second - food safety and food quality, environment, renewal, science and innovation, and business risk management. I will just table these rather than going into detail with them. Members should be able to read these at their leisure.
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I will speak for a few moments about branding. Canada's agriculture and agri-food sector enjoys a positive image abroad and has been recognized for its ability to deliver consistently safe and high-quality agri-food products. This success has helped Canada become the world's third-largest exporter of agriculture and food products. The program's services and tools supported under the APF will help producers achieve real improvements in food safety, food quality, environment, renewal, and science and innovation. These improvements will provide a basis for continued work on positioning the Canadian agriculture and agri-food sector as a world leader, and for strengthening Canada's position in global markets.
Governments will work together to increase international opportunities and recognition for the sector by branding the Canadian agricultural and agri-food sectors, and the fostering of market opportunities. Work on trade issues will also be strengthened to obtain better access for Canadian products by reducing traditional barriers and overcoming newer 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.
The department is an exciting place to be, because our successful and imaginative industries make it so. This fiscal year, the department will manage a stable budget. The 2004-05 budget target is $40.661 million. This is a slight increase from the 2003-04 estimate of $40.118 million. The 2003-04 forecast was a one-time increase due as an additional $3.5 million to producers to help them with the BSE issue. The estimates of 2003-04 to 2004-05 show a net increase of $678,000. The increase was required to meet contract settlements at the NSAC, department-wide salary adjustments, transfer of an inspector from the Department of Environment and Labour to our department, and a one-time loan reserve adjustment in 2003-04.
We will be able to maintain all programs and there will be no staff reductions. The department is confident we will be able to successfully continue providing the same level of service to our client industries. Some service costs have increases, as have others across government. These increases were necessary to offset the increasing cost of delivering services. While fees were increased, the department did not introduce any new fees. We were able to maintain what we have, even with the unforeseen natural crises, like Hurricane Juan, floods and BSE where program costs rose.
In closing, I'd like to reiterate that Nova Scotia's Agriculture and Fisheries industries are key to our economy and are so very important to our rural and coastal communities. These sectors provide employment and career opportunities that enable Nova Scotians to work in traditional industries, live in rural and coastal areas, train in Nova Scotia, and enable our young people to stay right here at home. Agriculture, fisheries and aquaculture continue to evolve. They will require research, new technologies and education to strike the right balance for economic prosperity and environmental integrity. Through the progressive and
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entrepreneurial nature of our farmers and fishermen, Nova Scotia is prepared to capitalize on opportunities in the life-sciences sector, involving demands for high-quality value added products. Fair trade practices are essential here at home and internationally.
Education and leadership development are key to future success and growth, and Nova Scotia is well positioned to provide relevant, forward-thinking educational opportunities through the NSAC. As you have heard, the Department of Agriculture and Fisheries is an active partner and responsive leader in Nova Scotia's agriculture, fish and aquaculture industries. Thank you for your time, Mr. Chairman.
MR. CHAIRMAN: Thank you very much, Mr. Minister, and just to let you know, the volume was good, it wasn't too loud, it was fine. And thank you for not being as loquacious as the first Minister of Agriculture and Fisheries who we had to listen to.
MR. D'ENTREMONT: It was longer, Mr. Chairman.
MR. CHAIRMAN: No, it was very good. Anyway, we will now start our round of questioning with the Official Opposition.
The honourable member for Hants East.
MR. JOHN MACDONELL: Thank you, Mr. Minister, and I want to welcome your staff, and in particular, your new deputy. I get to cross paths with Mr. Graham on occasion in my community, and the Department of Natural Resources budget estimates for some time now, so I look forward to working with him in the Department of Agriculture and Fisheries.
The first question will seem like a strange one, where can I get an Acadian flag?
MR. D'ENTREMONT: At the flag shop. We'll put you down for one.
MR. MACDONELL: Good, thanks. I guess one of the first things I want to do is to highlight what I see as the importance of the agricultural sector, and I'd be interested to give you this message, I guess. I asked your deputy, I don't know if he conveyed it when I saw him, I think it was the Horticultural Congress meeting in the Valley.
We hear a lot about issues of security; the federal government has put Anne McLellan in the job of safety for the Canadian citizen and I hear almost nothing ever said about a country trying to feed its own people, the security issue around that. Just the implications, if it ever was impossible to bring food across the border, and there is a fair bit that does come to Nova Scotia from the United States. I'd like it if you would take this as a suggestion of looking at the pitfalls I guess, in particular of trying to put Nova Scotia in a position to grow as much of its own food as possible for its citizens. I'm not sure what the implications are in terms of NAFTA on that, but I've been trying to find out.
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So that is something I think any country should have a policy to feed its own country, and in light of the present atmosphere around all security issues, it may be in our best interests to try to do that as much as possible, simply we may run into a problem with getting food across the border. I don't know if you want to comment.
MR. D'ENTREMONT: Ultimately, Mr. Chairman, I liked the statement, it was a very good point to bring forward when it comes to bio-security and the safety of our food supply. We do import an awful lot of agriculture products, fish products as well when you do look at that. CFIA tends to be the lead agency when it comes to food imports and what have you, and I know that we do have that discussion quite often at the minister's table about food security and a lot of the supplementary imports and issues surrounding that. Thank you for that.
MR. MACDONELL: I don't know if you remember, back I think probably September, and you would have been fairly newly minted at that time, and I'm not saying that the shine has worn off, but I wrote you a letter asking if either you could investigate, or push the federal minister to investigate why there is such a discrepancy between the retail price of beef and the price that producers were getting under this BSE problem. I don't have the correspondence with me, but it struck me to be a little vague, that may possibly, but I'd like you to address that. If you've ever raised it with the federal minister and if you know of any initiatives federally or on the part of your department, to look into why this discrepancy exists?
MR. D'ENTREMENT: Well I do recall the letter that you sent back in September, and that issue had come up on a number of occasions on a couple of conference calls that we had with the federal minister. The federal minister at the time sort of wanted to take the lead on that one. I know he had a number of meetings with the slaughterhouses and the bigger companies. But I think it's also been escalated to more of a Competition Bureau issue, and I know that the federal government has been pushing that one forward.
MR. MACDONELL: So, it's a Competition Bureau issue. Can you tell me why they think that, or why it falls there?
MR. D'ENTREMONT: I think they felt that there was a bit of price fixing going on, especially in the companies out west and a couple, I think, in Ontario. All in all, I think it was definitely a discrepancy and that was brought up by many members, whether it be ministers and other MLAs that brought that issue to me as well. That discussion is still ongoing as far as I understand by the federal minister.
MR. MACDONELL: The Competition Bureau is looking into it?
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MR. D'ENTREMONT: As far as I understand from the last conversation with the federal Minister of Agriculture.
MR. MACDONELL: Would you mind confirming that for me?
MR. D'ENTREMONT: Sure.
MR. MACDONELL: I want to touch briefly - I know the department had offered some help to sheep producers, I think it was support for calls and for animals that were retained and I think maybe up to 8 per cent of the flock, if my memory is correct. But it seems to me, that there was some other monies that were supposed to be available, at least the sheep producers were of the impression that it was. It was like if the cattle producers don't use it all up, there will be some money available for you. Am I right on that? My interpretation of a program for support for sheep producers?
MR. D'ENTREMONT: Well there were a couple of conversations that had happened with sheep producers a little while back. The mandate from the BSE Task Force was straightly derived for cattle as well as my directive from Cabinet. I think in the conversations that we had, we did discuss the possibility of looking at that should Cabinet give me that approval. At this point, we really haven't gone on with that issue. I know we're still watching our budget line, but our budget line is getting pretty much filled up there, so I don't know what amount of money I'm going to have left in that program.
MR. MACDONELL: Okay, so what you're saying is there really was no assurance given to sheep producers that there would be . . .
MR. D'ENTREMONT: No, I think it's something we could look into should there be some money left over but as it stands right now, there will be no surplus within that funding.
MR. MACDONELL: How much money was there in that fund?
MR. D'ENTREMONT: Originally $3.5 million, where $2.5 million was supposed to go towards the $100 sign-up for cattle. Then there was $1 million left over for the BSE Recovery Program. What we were doing was watching that to see where we would end up and if we would have some cash left over then we would move on to that discussion with sheep producers. Unfortunately, the money has been used up.
MR. MACDONELL: That's more as a result of Cabinet's decision, that's how they wanted the funds allocated?
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MR. D'ENTREMONT: That's right. It was originally from the task force, the task force had the recommendation pointing directly at the cattle producers and we did take that recommendation to Cabinet, and Cabinet gave that approval to focus on the cattle producers.
MR. MACDONELL: I know comparing the sheep industry to the cattle industry, it's not particularly large in this province. The sheep actually get caught up in this BSE net because the border closure applied to all ruminants even though there hasn't been BSE found in the sheep. So it would have been actually, I think, very appropriate to set a little bit aside for them since the problem wasn't created by them, or certainly wasn't created by ovines - if there's some room for any flexibility there. To your knowledge is all the money gone?
MR. D'ENTREMONT: Our indication is right now, the money will be gone from the commitments that we have in place now with the actual applications that we have through the system, that the monies will be gone. I do want to point out one thing, the federally announced Transitional Income Support Program, that was $4.4 million for, basically the Nova Scotia ruminants sector and livestock sector in Nova Scotia. It sort of adapts, the sheep did fall under that federal program. So there was some funding to go through that program. It doesn't necessarily hit the issue of hitting my $3.5 million high but it was taken up by the federal program.
MR. MACDONELL: I can only say, thank God for federal programs in this province.
I want to comment, this can be brief, I didn't bring a copy of the letter you just have given me a few days ago regarding those individuals who had indicated to me that they somehow had missed the original BSE Recovery Program list. I want to say that I expected that they or I were on a list somewhere, but your letter didn't really explain why they didn't receive anything. It just said they were on the list and they should have. I was curious what list you use. You said it wasn't the Federation of Agriculture.
MR. D'ENTREMONT: We did use the farm registry information. You, as a farmer, sign up every year to be a registered farmer, and we did use that list to send out the information.
MR. MACDONELL: So it only would have been registered farmers that even could have been notified? I'll give them copies of the letter you gave me, I don't think it will explain to them why they didn't receive it. Especially when the presidents of the Canadian sheep producers and the provincial sheep producers are people who didn't get it, but anyway.
I want to ask a couple of questions around AgraPoint International. Is it my understanding that you're still the only shareholder?
MR. D'ENTREMONT: That's right.
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MR. MACDONELL: They will receive their $2.2 million in this budget?
MR. D'ENTREMONT: That's right.
MR. MACDONELL: Where would I find that as a line item?
MR. D'ENTREMONT: You want to look at the Supplementary Detail, Page 3.4.
MR. MACDONELL: Okay.
MR. D'ENTREMONT: Under Agriculture Services Administrations, there's an estimated number of $4,115.6 million, in that number would include the $2.2 million for AgraPoint.
MR. MACDONELL: Can you tell me - I see that AgraPoint is listed under Agencies in the Public Accounts booklet. Can you tell me the reason for - I guess my thought has always been it was a Crown Corporation, but I see that it's regarded as an agency. I think January 2003, Peter Clarke for AgraPoint came before the Resources Committee and he said that they were a Crown Corporation. I think I do have a copy of that transcript. So, obviously, he wasn't right. Can you tell me what's the difference in the set-up, between doing this as a corporation or as an agency?
MR. D'ENTREMONT: I think that back in 2002 when it was set up, it was set up as a limited company rather than a Crown Corporation. To give more info on that one, a quick background that we have on the company would be that AgraPoint was established as a result of the Government of Nova Scotia's decision in the Spring 2000 Budget to restructure the funding delivery of production services with the province's agriculture industry. The government downsized regional offices and eliminated all production specialists. In doing so it provided $2.2 million to industry to direct and develop the services it required to meet its needs. AgraPoint is an incorporated business that operates at arm's-length from government and has the ability to generate revenues.
MR. MACDONELL: Okay, so you're saying it was created as a limited company. Is that a usual thing for them to be listed under Government Agencies? Why is it listed as a government agency if it's a limited company?
MR. D'ENTREMONT: I can't answer that. I would like to get the information for you.
MR. MACDONELL: I think that would be worthwhile.
MR. D'ENTREMONT: Was that in that most recent listing of Government Agencies and . . .
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MR. MACDONELL: I think I have it here. Public Accounts, Volume II Agencies Funds for the Fiscal Year 2002-03. So I'm assuming that's the most recent because that came with this pile of documents and in the Table of Contents, it's Page 6. It's the second under the Table of Contents and that brings me to another question. If you look on Page 10 of that booklet (Interruptions)
[3:45 p.m.]
Anyway, I'll ask the question and maybe you'll have an answer before the booklet comes back. On Page 10, at the bottom of the page, it says Government Assistance - this is with regard to AgraPoint International - Government Assistance Related to Capital Assets and Other Assets is deferred and amortized to earnings on the same basis as the related asset. So my question is, is there any other government assistance other than the $2.2 million that you know of? I was curious about that line, the way it reads.
MR. D'ENTREMONT: According to my office, there is no other funding that goes to AgraPoint outside of that $2.2 million. But I think if there's a particular project they will be able to access other funds through other departments, on particular projects. I think it gives them the opportunity to do that if necessary. They do have the power to generate.
MR. MACDONELL: I know that. I know that they have the power to generate funds. I was just thinking, $2.2 million is a pretty significant amount to work with and I'm just curious as to the fact that they might access other public money on top of that.
MR. D'ENTREMONT: I'll try to see if I can get you a really good answer on that one to sort of resolve that issue.
MR. MACDONELL: That'll be great. I guess I only have one more question with this regard - is it possible for you as the only shareholder and the fact that the province, and this is a Crown agency, to get an itemized price list of fees charged for what services and whatever?
MR. D'ENTREMONT: Yes, we'll get all that information together. Our relationship with AgraPoint has tended to be a good one. There are a number of issues within the industry pertaining to AgraPoint and that is one of the issues, that core list of items. We're trying to put that together.
MR. MACDONELL: Do you want to take a look at that, Mr. Graham? Page 10 is at the bottom of the page, Government Assistance.
MR. D'ENTREMONT: We'll get a clarification on that.
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MR. MACDONELL: I would certainly like some type of clarification as to the fact that it's a Crown Agency and a limited company. There seems to be a disconnect there, I think.
Recently, I believe last Tuesday, Pork Nova Scotia was before the Resources Committee. They had indicated a couple of things - one is the sow project and I might be calling it by the wrong name, but I think they wanted to establish farmers interested in forming a co-operative to build a facility that would house a certain number of sows and they could create some efficiencies by doing that. Then the weaners would go out to individual farms and they would raise them. So it was kind of taking a farrow to finish idea and consolidating, at least the farrowing part of it. To date, that seems to really not gone very far as far as getting support from the government on that. I'm curious about your thoughts on that, why is the province not supportive of it or supporting and helping them out in that regard?
MR. D'ENTREMONT: That has been brought forward in a couple of conversations that I have had with Pork Nova Scotia, but I don't recall an actual ask of the total amount that they were looking for. Now, I don't know if there's an actual request to government for that funding. I know it's been a discussion topic on a number of occasions, but I haven't actually seen a request to government for that.
MR. MACDONELL: Then, if it's been an actual topic on a number of occasions for discussion, what was the message you were sending them? We haven't seen an actual request or we don't really like the idea?
MR. D'ENTREMONT: I think a lot of things got mixed up together when we started talking with Pork Nova Scotia. Prices were depressed at that time, we were looking at some kind of vehicle in order to provide monies to them and it turned out to be the loan program that we went forward with. So I think that issue did go back and go to the back burner in our discussions.
The other issue was to make sure the whole industry, or at least a good core amount was onside with the whole issue of that farrowing facility. I think we all thought it was a decent idea and how to strategically change the industry so that it will be able to survive into the long term. We're still waiting to work on that strategic plan with them. We do have a meeting set up in May to work towards it. They're supposed to be coming back with some more information on that strategic plan, and I'm sure that topic will be in it.
MR. MACDONELL: Two things - how did you intend to have discussion to find out, or do you seem to think that the whole industry is not onside on this or there may be some indication of that, although I was thinking if Pork Nova Scotia made the presentation, they kind of speak for the whole industry. The other thing, wasn't there a task force? Didn't the pork producers participate in a task force with the department last Spring? You weren't there,
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but I thought that was one of the recommendations of that report. So, it seems to me there's been a study done last Spring and I think their concern is that I think their task force report is sitting gathering dust.
MR. D'ENTREMONT: As for the study, and I do apologize for not knowing about it, but I'm sure the discussion will start to pick up as we start to go forward now that prices seem to be better. I can get more information on that one too if you'd like. It's an issue that was on the table and I'd like to bring that one forward. I started getting ruminations behind me that there was a document produced and I'd like to see a copy of that as well.
MR. MACDONELL: I would appreciate anything you could tell me. It seems that, I think they've made a pretty good case. I can see the government's reluctance in a bit of a downturn, but I think the industry was going on the notion that they have to try to stabilize the industry in a way that they're not always coming back to government for help every couple of years. I think this was a major step in what they were seeing as a possibility for doing that. Anything you could get me . . .
The other point I wanted to raise that they suggested, I'm just going to bounce this off you and see what you think, but they were looking at wanting to impose a 10 per cent per kilo - the only term I can think of is levy, but there might be a different word - for every kilo of pork retailed. That would go back to hog producers. Their thoughts were that this would have to be legislated, so I think the basis on this is that they could be more competitive if that were the case - and their grain costs is a big problem - but, also the fact they believe that within the price structure, the present retail price, there is enough for producers as well as processors and retailers. I think they indicated a 300 per cent increase from what they get for hogs compared to what's sold in the display case. So they think some of that could actually go to them without raising the price to consumers. I just wondered - you're probably aware and what are your thoughts on that?
MR. D'ENTREMONT: Not that long ago, we set up a pork round table and what we tried to do was bring together the farmers, Larsens and Maple Leaf as well as the retailers. We did have frank discussions of what the farmers thought was at the end of the day and what the retailers thought. So I think that's turned into a really good discussion vehicle, I know there were a couple of commitments on behalf of Sobeys to give some of our pork producers. It is something that we've said we want to do quarterly, we want to sit down every couple of months and discuss this issue. The 10 per cent levy was something that was discussed at that table, but we didn't really get a clear feeling of how that would work when it comes to the retail end, and if there is really that kind of markup at the end of the day.
I think if you sit everybody at the table everybody says they don't make any money, but I think at the end of the day we can sit down and try to eke out that existence. I think it was one of the first times that that whole group had sat down at one table and discussed those common issues and was, I think, something that was very productive and as I said, there were
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a couple of commitments that did come out from that meeting and I'm looking forward to the next meeting of that one.
MR. MACDONELL: I know what those discussions are like, I think when we go to governments, quite often we don't have any money. I want to touch, just briefly and then I want to come back to BSE. It looks to me that agricultural services have been cut in this budget, and certainly programs and risk management I think have been cut by more than $1 million. Your forecast last year, was I think $11,197,400 and they spent about $3 million more. I don't know if that was the difference in the $3.5 million, but you are budgeting less, you're budgeting $10 million, just slightly over $10 million. In a time that some form of a risk management program seems to have been so important and we're not really out of the woods yet with regard to both pork and beef. Am I reading it right? Is there a reduction in funding there, and why?
MR. D'ENTREMONT: Mr. Chairman, thank you. You will see if you look at estimate to estimate there is a decrease of just about $1 million. Last year there was a prepay done. Because this is a five-year plan, in order to pay for some of the things that we did last year we actually prepaid it from last year. So, it is showing $1 million down this year. If you look at the $14 million forecast incorporates that $3.5 million for BSE that we did add and that's the line item that it gets put under.
MR. MACDONELL: Well, I have to say, it's this prepaying, for those of us who don't work in the Department of Finance, it's really hard to trace money that is booked for spending ahead or whatever. It makes it difficult to really get a handle on what the government is doing. What about Marketing Services, a $77,000 increase this year and they promote Nova Scotia grown products? It seems that in light of all that we've heard around trying to get the province to put more Nova Scotia products into its institutions, et cetera, that this doesn't seem like a lot. I'd like you to touch on the ability of Nova Scotians to access institutions with our own products.
[4:00 p.m.]
I heard a conflicting statement by the Premier, that he wanted to go down this road, and then I thought I had heard that he said it wasn't possible. So, I'm curious as to where you are with that.
MR. D'ENTREMONT: Ultimately, the whole Brand Nova Scotia - there are basically two programs going on at the same time, the bigger Brand Nova Scotia program which incorporates food products, incorporates tourism, incorporates a whole plethora of other products on a more global scale, basically falls under the jurisdiction of economic development, within that, as the piece of agriculture and agri-food products. Our department is working toward more of getting our products into Nova Scotia institutions.
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When you referenced what the Premier was talking about, that some of these things can't happen as quickly as we can possibly do them, that had to do with the federal inspection requirements to get some of these meat products into Nova Scotia institutions such as hospitals, in order for hospitals to keep their certifications under their Canadian guidelines or regulations that that falls under there. In order for them to maintain that, they need to have Canadian inspected products. Because we don't have a Canadian inspected facility there's going to be a lag time before we will be able to provide Nova Scotia products.
Our saving grace, really, is the new plant that is going up in Borden, on P.E.I. which will be a Canadian federally inspected slaughterhouse which will be able to run meat from Nova Scotia through that system and get it back here to get into our institutions. Our assurance right now from the conversations that the Premier has had with Premier Binns is that that should be fully on-line by September. We should be able to see a change in that by September.
MR. MACDONELL: Well I'm curious as to why - I can see in a federal institution, like maybe the DND base, National Defence, but on provincial institutions, hospitals, et cetera, why would we need federal inspection for those? Why can't we use provincial inspection for products which are not leaving the province?
MR. D'ENTREMONT: Apparently the certification that they do have is a federal certification that hospitals must adhere to in order to be a hospital and apparently that's where that falls in place, their meat and meat products would have to be Canadian inspected in order to maintain that federal designation as a health care facility. I don't know the exact terminology as I said, hospitals tend to be slightly federally regulated in order to keep those certifications they must have that kind of product.
MR. MACDONELL: That's a wrinkle I never heard tell of. Anything that you could get me in that regard, I would appreciate it.
I was to a Cattlemen's Association meeting in Pictou a week or 10 days ago and one of the producers from the Antigonish area, I think he is right on the border of Antigonish and Pictou. Fraser Hunter made a presentation to those producers there and he had talked about going on a government Web site and looking at some procurement requests - which I'm hoping to be able to get from him if I do, I'll try to present it to you. Anyway, the indication was around health facilities, hospitals I think in the Capital District here. One of the requests was for New Zealand beef, so many pounds or whatever of New Zealand beef. I'm just curious, does that make any sense to you, in a time of a BSE crisis, that we would be looking for New Zealand beef to provide to Nova Scotians?
MR. D'ENTREMONT: Ultimately we would have to look at the procurement policies that we do have in place by those institutions. Does it make sense? Not really, I think what we see are the supplementary imports that do come into this country, it's not just a Nova
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Scotia phenomenon that we do have some of this back-selling of products from other countries. I fail to see why it would have been specified New Zealand beef. If you can find that document, I would appreciate seeing it and I will ask the question as well on my side.
MR. MACDONELL: When I get it, and I was told I was going to get it, I'll see that you have a look at it, I'm as curious as anybody, and it would seem to me that it would be something that the institution itself had made the request. I guess the other issue is around the BSE. You would be aware that two of your colleagues and myself and the member for Annapolis, who is the Liberal Agriculture Critic, we were to Washington early in March and my impression from that meeting, and certainly from the Undersecretary of Agriculture there, I think his name is Dr. Lambert. The comment period was going to end April 7th, that they would look at the information that had come in during that period, and hopefully come up with a ruling by June. I'm wondering what context you have or what the people you're talking with, what indications they're giving you around the whole border opening issue.
MR. D'ENTREMONT: We had the opportunity to go to Washington just ahead of you guys, by about a month. It was the Ministers of Agriculture from across the country who went down to see the Commissioners of Agricultures from all the states. During that conference going on we had the opportunity to present our feelings of BSE and opening the border. We were third on the schedule. The first guy to get on was a Dr. DeHaven, who has been the veterinary pathologist who has been in the lead on the Washington case of BSE. He had the presentation to the folks first.
The second person was a Mr. Acord, the Undersecretary of Agriculture for USDA. They basically stole our speech. They were talking all the things we were talking, the opening of the border, the harmonization of regulations when it comes to ruminant feed, testing, et cetera. We as the third group, got up and made that presentation, and reinforces exactly what those folks had said. The questions that we did get from the Commissioners of Agriculture tended to be sometimes protectionist, sometimes, lets open up because we are integrated.
That was our message, an integrated system, it's an integrated market, North American beef should be branded as such, not necessarily just Canada beef and U.S. beef. If you really trace some of these things, you will see some of these calves born in the States and grown in Canada and vice versa. We did have a nice long discussion with them. We did have a meeting the next day with the Undersecretary as well and we did talk about the comment period, it had just opened and we were both going to have that closing on that April date. Our feeling, that's amongst all of the ministers across Canada that June, we should have a positive announcement from the U.S. to open up to live cattle in under 30 months.
We did have on Friday, an opening of the border, another restriction taken off, which was the access of bone meat being allowed into the U.S. for animals under 30 months as well. These are all tending to be positive steps. The fingers are crossed, my toes are crossed that
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at the end of the day the border will open and then we have a chance to start working towards normal, which still will take some time.
MR. MACDONELL: I agree, I want to say that I hope someone is thinking of the people who were in the other ruminant sector who were kind of caught up in this. You may or may not be aware that this year in Quebec is the World Sheep and Wool Congress for sheep producers. That entails a show and a sale and not to mention speakers on a variety of issues. The international flavour of this kind of disappeared with the closing of the border because nobody can take any animals out of the country. As for me, I'm sending four animals to this sale. I kind of hope at some point, to try to access the New England area farmers for breeding stock for Suffolk sheep, but certainly it is worth my while even in terms of Quebec, and that area to try to show a presence for that market.
This is just one small thing really that has been impacted by the inability to open the border and I would say if the border opens in June, you're not going to see much of a difference, it's going to be too late for the sale, and as far as I know, this is the first time it has been held in Canada. It hit at the wrong time for sheep producers in the country. I'm trying to watch my time, because I'm going to hand off to my colleague and my Fisheries Critic.
I want to touch on Avian flu. Before I go there, I want to say I got my notice the other day around the ILT vaccinations. My kids show some birds for 4-H. It's not clear to me, and if someone can clarify this for me today I'd really appreciate it. When I look at the instructions it said birds under three weeks of age will not be vaccinated. I have an incubator, I have birds going to hatch and I've never known for sure what actually happens - there is a quarantine period of 30 days once you vaccinate, so here I have birds hatching after I've had birds vaccinated.
I know in the case of my neighbours down the road who bought some chicks after they had theirs vaccinated and indicated on the form when they applied to get them vaccinated that they were going to get these chicks this day, what was the protocol and they never got a response. Then the department came and euthanized the chicks which you can say they didn't appreciate, especially when they were trying to get information. I'm one of those people who would like to know what my role is in this regard, whether I should move the birds that I have vaccinated off my property or move any birds that hatch later off my property, and just how the department looks at this. You can give this to me whenever, you don't have to respond, unless you know.
MR. D'ENTREMONT: It's a very good question, but I'll have George Smith give you a call to give you the ins and outs, there's a lot of regulations around that one.
MR. MACDONELL: Is his signature on the letter?
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MR. D'ENTREMONT: Absolutely, I'll get George to call you.
MR. MACDONELL: The other thing is around Avian flu. When I was - my colleagues we went to Washington, but we spent a day or so in Maryland. The southern part of Maryland I understand was experiencing Avian flu. Whether it's the same as the one in Asia that is particularly of concern, or the one in British Columbia, I don't know, but I thought that we are closer to Maryland than we are to B.C. Along with the implications I would have concerns around what the impacts might be for Nova Scotia's poultry industry.
I also have a concern around the implications for me, I have a flock of domestic water fowl, some heritage breeds of poultry: Barred Plymouth Rocks, Golden Laced Wyandottes, Broad-breasted Bronze Turkeys. The whole works wrapped up wouldn't amount to a big pile of dollars. They are what they are. I like what I do when I'm not in the Legislature and not to say that I don't like what I do when I'm in the Legislature. This little bit of farming I do is a good thing for me and I think good for my children. I would hate to find out for whatever reason, an outbreak of Avian flu or whatever, that there is, I'd be part of a quarantine area that would mean the elimination of these birds.
In both those regards for the larger industry and for little backyard poultry enthusiasts like myself, I just wonder what you know about the B.C. situation or Maryland and what steps if any that the government looks at in trying to prevent such a thing in this province?
MR. D'ENTREMONT: We've been monitoring the outbreak in B.C. very closely. Our department has a veterinarian, Dr. Gord Finley, participating in the CFIA conversations that happen pretty much every day. He's also on the list for all the information that flows from CFIA to all the provinces. We have sent out a couple of letters to our producers in the province, just telling them to be very careful in what they do and to upgrade their bio-security where possible, and to really keep an eye on it.
The feeling is that the outbreak in B.C. will pretty much stay in B.C., which we hope. We also need to look at how their industry is run, their industry, 92 per cent of all their industry is in the Fraser Valley, where our industry tends to be spread across the province. The concentration of birds is definitely a lot less than what they would be in B.C. But ultimately the CFIA does take the lead on these issues. They monitor it quite closely, but we're definitely working closely with our feather boards to make sure they're doing all they can do to ensure this doesn't happen. But, as for the particulars of who would be in quarantine and who would be out of quarantine, I'm not too sure at this point.
[4:15 p.m.]
MR. MACDONELL: I appreciate that. Before I hand off to my colleague, when I asked the question around the procurement in the New Zealand beef, I saw one of the staff bring a note and I just wondered if it related to that? Okay.
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With that, I say thank you to you and your staff. I really appreciate your time and if you could give me a response on those issues I raised and I'll turn it over to my colleague, the honourable member for Pictou West.
MR. D'ENTREMONT: If I may make one comment with regard to your first question with regard to the Acadian flag. I'll ensure that all members of this House have a flag to take home, an Acadian flag, because of this l'année l'Acadie.
MR. MACDONELL: I need to give mine to somebody so if you could give me two?
MR. D'ENTREMONT: Now we're getting on.
MR. CHAIRMAN: The honourable member for Pictou West. You have approximately 15 minutes.
MR. CHARLES PARKER: I'm glad to hear that about the Acadian flag, I was going to suggest that maybe all members should have one to put up in their offices or on their street front or whatever. This being the year of the Acadian celebrations, 400 years, a great idea, glad to hear it.
Most of my questions are going to be around the fisheries. Maybe I'll mention a little bit on agriculture before I come to that. As my colleague had mentioned here, he and I had attended a meeting of the Pictou County Cattlemen's Association recently and there's still a lot of concern out there around the BSE issue and the whole state of the beef industry in our province. It's good to see producers are coming together to share their common concerns, but I think they're still looking for answers, still wondering if they're going to survive this crisis. Really, that's what it's been for almost a year now since the BSE cow was discovered in Alberta.
It's been tough. I've talked to some of the producers who are struggling financially, they're having a hard time. They're starting to talk more and more about local markets as being an answer to getting out of this crisis. In a nutshell, is there any message you could give to them that would offer them some hope that things are going to get better for them?
MR. D'ENTREMONT: As I said to the previous speaker, the honourable member there, is that we are thinking positively that the border will open in June. We're on the back side of the whole industry, where we are cow calves - we produce the calves to fill in the feed lots in other provinces, for the most part. When they're not selling their animals, we're not selling our animals so we're starting to get a bit of a backup of our inventory. If you look at what a farmer was feeding prior to the Spring, sometime in the Fall, they would have had one number, but they would have bred some of these animals as well. Now we have a bigger inventory than what we had.
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The positive thing is, consumer confidence in beef in Canada is at an all-time high. Canadians are eating more beef than they ever had before. The local issue is a really good one - we do have 20 provincially-inspected plants in Nova Scotia that are increasing their production levels. Every time you talk to them they're doing a couple of extra cows. There's one down in Annapolis provincially inspected that is trying to add to their production levels. These are some of the good-news stories that are happening here.
We do need to start talking a little bit about local use. Right now we only produce somewhere close to 7 per cent of our total consumption in Nova Scotia. There is definitely an opportunity here for us to try to fill in some of that gap. How that's going to transpire over the next bit remains to be seen. The federally-inspected plant coming on-line in Borden, P.E.I. in September is good news and I urge all producers to use that, those who are finishing cattle. On the other side, it is in P.E.I., that's where we sell the majority of our calves, so hopefully we'll see quite a bit of change in the way that industry is working.
There are a number of other issues that surround it, but I'll try to keep my comments short.
MR. PARKER: Opportunity maybe is the key word. Producers are maybe looking for some help from government to offer hope that there is some opportunity for them to come out of this and to thrive and survive in the future.
I'm going to move on to fisheries because I know my time is quite limited. First of all, in your whole Department of Agriculture and Fisheries, your total budget amount is roughly $40.8 million. Of that, what portion is for agriculture and what portion for fisheries?
MR. D'ENTREMONT: It's difficult at this point to pull everything up because if you look at Marketing Services, part of that's aimed at the fisheries sector. You have Fisheries and Aquaculture Services is $3.4 million. Part of the marketing services - I would say the licensing piece and licensing compliance piece would all be based at fish. I could get that number for you, what the actual breakdown is. I think if you look at the whole business risk management of agriculture, they would have more money invested on that side than we do have on the operational side of what we do for fisheries.
MR. PARKER: Maybe 75/25 in favour of agriculture or possibly it's more heavily weighted towards agriculture, I know. I guess one of the concerns that I've heard from fishermen, I've certainly heard it from farmers - I know this is not something you can address in your budget estimates, but nonetheless, those producers would certainly like to see a separate Department of Agriculture and a separate Department of Fisheries. That's the way it was up until 1999 when Fisheries and Agriculture and I believe Natural Resources too were all combined under the same minister at that time. Since then it's separated, Fisheries and Agriculture still being together.
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At any rate, I'd like to get your thoughts on that - whether you feel it would be a benefit to the industry, both the fisheries industry and the farming industry to have a separate department for each?
MR. D'ENTREMONT: If you look at the way the department is structured - I did have a bit of a structure speech there, but I did take it out, but I did table it, you might want to look at it. If you look at the shared services that do happen - we share our minister and deputy minister, Marketing Services, some of the compliance and legislation pieces. After that, they are two completely separate departments. When you really look at how they're structured and the people that work with them, we do have two separate assistant deputy ministers at their mandate. One is to work exclusively with the fisheries sector and the other one is to work exclusively with the agriculture sector.
Some of the things that we do are very similar because it's food and food safety, legislation and compliance and the rest of it; they are working separately, just the name is together.
MR. PARKER: It may be a perception as much as anything, but the fishermen I've talked to would very much like to have their own separate department, their own separate minister and so too would farm producers like to see it separated.
I guess because I'm under a limited time here, I come around to the question in my county, Pictou County, that's of concern to fishermen and fishing families right now and that's the situation with Polar Foods and the distribution of the assets from that disaster that happened in the industry on Prince Edward Island. The Arisaig and the Lismore plants have been basically closed down for production, at least for producing lobster product and so I have a couple of specific questions on that point. I think I'd asked you this in the House, but around the sale of Polar on P.E.I., my understanding is that any lobsters that are caught here in Nova Scotia that were normally going to Arisaig and Lismore now must be shipped and processed on Prince Edward Island. Is that a contravention of the interprovincial agreement on trade? What can we do about it?
MR. D'ENTREMONT: . . . I'll table the letter, I meant to give it to you sooner. Here are the questions that we did ask the Government of P.E.I. in the whole agreement with the new company. Number one, are there government-imposed conditions that require Ocean Choice to process Nova Scotia landed lobster, at the remaining Polar Foods plant in P.E.I.? Number two, are there government-imposed restrictions on the operation of the Lismore plant? Three, are there government-imposed restrictions on the sale of the Lismore plant? We did receive a reply today. We are still researching the information that's held within it, but it looks like there are some definitely questionable things that we do want to move to Intergovernmental Affairs to look at this further.
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MR. PARKER: That's good to hear. The concern is that, how can another province step in and say that our resource, our lobsters, can be taken out of province and have to be processed in their province and certainly as a department and as a government, we should have a say in that, rather than them dictating what can be done here on our shores. So you're still looking at that response in determining what your response will be then?
MR. D'ENTREMONT: Exactly.
MR. PARKER: I guess the other part of my question in relation to that is, Ocean Choice now has purchased those plants and they, I guess, are not interested in processing there. Is there any possibility that, with the department's help, those plants could be sold to another operator that could then process right there as it has been for decades? I'm not sure.
MR. D'ENTREMONT: I think if we look at the processing capability across Nova Scotia, that's an important plant in that area and I think it's our intention to ensure that it maintains some kind of production. I would hope to see more production than what it is doing today, if at all possible. There are a number of companies that are looking at that asset and seeing what the answer is going to be from the provincial government when it pertains to the whole agreement with Polar Foods, to see if that might go up for sale again. Ultimately, we're following that one very closely and we would definitely be there to help anybody who would like to use that facility, should it come up for sale.
MR. PARKER: There are certainly other processors out there that are quite capable. The workforce is very experienced, and certainly knows how to process lobster and other fish. It would be a shame to lose that resource from the northern part of our province. Failing that though, I know there are other fish plants in the area not too far away. There's the Caribou plant, North Nova I believe it's called. There's Cape John Seafoods, and there are others. So it would be important, I guess, to encourage some method for those workers to be able to relocate, failing an operation up and running there in Arisaig or Lismore, and if not, I guess the third option is, is there going to be any assistance to the workers, the 140 workers that may be out of a job if neither of those first two options come through? How can you best help those workers?
MR. D'ENTREMONT: Ultimately, we are working with the Office of Economic Development at this point, to look at other opportunities in the area, to ensure that there will be some work for those workers, but ultimately, my feeling is to make sure that plant goes back into production as it was prior, if not, into more production.
MR. PARKER: How much time do I have left, Mr. Chairman?
MR. CHAIRMAN: Your time has expired.
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MR. PARKER: My time has expired. I have some other questions that I'll come back to when our turn comes around again. Thank you.
[4:30 p.m.]
MR. CHAIRMAN: We'll now pass off to the Liberal Party.
The honourable member for Annapolis.
MR. STEPHEN MCNEIL: Mr. Chairman, I, too, may also share my time with my colleague, the member for Digby-Annapolis. I won't say the best news I heard all day, but probably close to it was the Acadian flag. My mother would appreciate the Acadian flag - Mombourquette is a good Acadian name (Interruption) I will thank you. The only comment that I would have before I start, being new, the minister to the Legislature, and maybe this has been the case all along, I don't know. I think you're sitting on a golden opportunity as Minister of Agriculture and Fisheries to highlight the importance of the agriculture industry in Nova Scotia, not just because you're the minister. My experience with the member for Hants East, who has been very dedicated to the agriculture industry and it was a pleasure to be in Washington with him with his knowledge around the agriculture industry, to be able to talk to the American Government, to deal with. I think this department could lead the way for government in showing co-operation amongst the three Parties, because if you listen to all of us, we're all saying the same thing. The winner would be the agriculture industry and the rural economy of Nova Scotia.
Having said that, now the niceties are over with, I just want to go back to your opening comment when you spoke about the amount of money that was in the BSE program, $12 million I think you quoted for Nova Scotia. You made reference to the fact that it was in accordance to what the BSE Task Force had asked for. How much of that $12 million is provincial money?
MR. D'ENTREMONT: All right, I'm going to give you a quick rundown. Sometimes it's hard to see what was the provincial contribution and what's the federal contribution, but let me give you a quick rundown. Nova Scotia beef producers enrolment program which was our CAIS sign-up, right now there's $2.336 million. The provincial modified BSE Recovery Program, that's the one we funded completely, $646,413. The Canada-Nova Scotia ruminant cull program, now that says $1,815,026, what part of that? That was a 60/40, so (Interruption)
MR. MCNEIL: Could we say out of the $12 million, half?
MR. D'ENTREMONT: Yes, somewhere near that.
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MR. MCNEIL: That's fair enough, around half, yes. The reason is you go back and you say, and I guess this is a little bit of a burr in my saddle, when you say we met what the task force had asked for, and I'll read you the two recommendations. The recommendations were, provide immediate funding of $400 for breeding aged cows, which we had figured approximately would be about $10 million, and re-establish a Nova Scotia BSE Recovery Program, the key word there is Nova Scotia, which was modeled after the previous program, which we estimated to be about $1 million roughly, okay. The key thing was, out of the original one, that money would be directly into the hands of producers. There is no way that you can tell me, out of that $12 million you spent, that anywhere near that, got to the hands of the producers? It's been eaten up somewhere along the way and I don't know where, but long before it . . .
MR. D'ENTREMONT: All that money that we have listed off here has gone out in cheques to producers. Now, I do take your point, but all these are direct payments to producers.
MR. MCNEIL: All $12 million has been a direct payment to the farmers?
MR. D'ENTREMONT: Correct. Except for that CAIS Program where we had the estimated second payment for 2004-05, so that's a 50 per cent holdback, which is about $800,000, which hasn't gone to the producers just yet, or should soon be going out to them.
MR. MCNEIL: This really highlights the biggest issue - you've mentioned it - the Nova Scotia Federation of Agriculture's annual meeting and as well, the disconnect between the producer and this department. I can't find a producer out there who would tell me that their industry got $10 million. I can't find one that's going to tell me they received $9 million. Not to belabour that point too long, but there's some disconnect here on whose numbers are right. The other thing that wasn't a recommendation which we talked about on the bottom, there was a suggestion that there be an industry-government BSE advisory group created to examine the long-term impact because we really were only able to deal with the short term. Has there been any movement on that? Has there been anything done with that?
MR. D'ENTREMONT: No, not as of this point.
MR. MCNEIL: Okay. Thank you very much. You had mentioned also in the beginning of the estimate, I believe it was in 2003, sorry on Page 3.2 of the Estimates Book. I will try not to be confusing in my questions, but I probably will be. In 2003 your estimate was $40.118 million when the actual was $42.5 million. This year you've estimated $47 million. Why are we going, I guess, with the estimate of 2003-04 and not the actual or forecasted? Why isn't that the base point here? It seems like your base point is your estimate of the previous year.
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MR. D'ENTREMONT: In Generally Accepted Accounting Principles we do go from estimate to estimate and put in what we would think would be relative in order to take the pressures in that we have. The forecast that you see is, of course, the $3.5 million that we did put together for BSE, that would be a one-time payment. I don't think there was a request for an ongoing contribution in that case. So according to the accounting principles that we must adhere to, we just inflated as the cost of doing business.
MR. MCNEIL: But pre-BSE, we haven't even estimated the actual of 2002-03. We're not even at that target yet and the actual budget in 2002-03 was $41.44 million. That's the actual we're now at, you know, and that's pre-BSE.
MR. D'ENTREMONT: Yes, there was a one-time payment. If you go back to deal with 2002-03 in the estimate where it was, I think we're looking at agricultural services of $15 million and then we went on actual of $20 million. I think that has an increase of x amount because of flood and then the prepayment for the risk management, the APF. So that's why it shows, but ultimately from estimate to estimate to estimate you're seeing an increase in the departmental budget.
MR. MCNEIL: But from actual to estimate you're seeing a decrease. I'm not an accountant I guess, maybe that's why I need to be an accountant to deal with it.
MR. D'ENTREMONT: Well, ultimately I think every year we've had some kind of natural occurrence that we don't necessarily budget for.
MR. MCNEIL: But you can appreciate from a provincial perspective on a $6 billion budget, we're talking a surplus of $2 million and we, as a Department of Agriculture, haven't been close to the estimate or, you know, you've almost blown your entire surplus out the window last year in the Department of Agriculture and Fisheries and there doesn't seem to be any contingency, but anyway, I appreciate that. Page 3.4 in the Supplementary Detail, in Administration there's approximately a $1 million increase in your estimate. What's that for?
MR. D'ENTREMONT: If you look at the 2002-03 estimate where you had an estimate of $4.1 million and then you look at what we had estimated last year, there was a budgetary reduction in 2003-04, including a bad debt reserve adjustment for the Farm Loan Board, and now we've caught up again with it this year, back to the amount of money that's required in there, because of that finance adjustment.
MR. MCNEIL: Tell me that again.
MR. D'ENTREMONT: If you look at the estimate for 2002-03, we've got $4.1 million. If you look at the estimate for 2003-04, there is the $3.2 million.
MR. MCNEIL: Right.
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MR. D'ENTREMONT: Okay, that's because of a budgeted reduction and included a debt reserve adjustment from the Farm Loan Board. So it shows a little less money because of that adjustment that had to be done and we catch up again this year with the amount of money that we had invested in that, or coming close to that, from 2002-03.
MR. MCNEIL: I will ask you about the Farm Loan Board a little later, but last year the Farm Loan Board had almost a $2 million revenue, net income. How come there would be an adjustment or a $1 million loss there, a write-off?
MR. D'ENTREMONT: Apparently there was an actuarial adjustment done on that of close to $800,000.
MR. MCNEIL: Can I get some detail on that maybe a little later.
MR. D'ENTREMONT: Absolutely.
MR. MCNEIL: Great. The other issue on that same page is Programs and Risk Management. You were asked by the member for Hants East earlier, you have estimated $10 million, what's the rationale behind that, considering the numbers that I see here over the last two years, that's $2 million less than what has been required in the last two years in the actual operation of those programs.
MR. D'ENTREMONT: A lot of time we've been in transition between some old programs and some new programs so you're seeing us catching back up with the amount of monies that should be allotted under that item line. If you look at the budget, the estimate to this year's budget, yes, the decrease is about $1 million, but that also reflects last year's prepayment to the APF. The APF is a five-year plan that we can sort of take money from one spot and sometimes move it over to another within our accounting principles. The federal government apparently can move stuff anywhere they want to move it within that five years. So we sort of have to go along with them sometimes, too.
MR. MCNEIL: It's all within the APF?
MR. D'ENTREMONT: It is all within that APF and that adjustment does make sure that we do have all our money in place for our commitment for APF this year. So you're also seeing a bit of an adjustment along with that program.
MR. MCNEIL: Just staying with that whole list there of the forecast of 2003-04 that was $21.478 million and you've estimated $18 million. When you look at that cluster of expenses that you have there, if you're a member of the agricultural community, why should you feel good about that? The part of that program that they seem to be taking, you know, that is of benefit to them, which are the programs in the risk management portion, is $4 million less, but yet your estimate is $3 million, why should they feel good about that and
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what has been characterized by just about everybody, having gone through the worst year in the history of agriculture, why should they feel good about that?
MR. D'ENTREMONT: What they should feel good about is hopefully we won't have another BSE and ultimately that number does reflect the BSE numbers and it does show the extra money that it was able to get from Cabinet. So ultimately what we're doing is simply readjusting to our normal and should something come up, then we will have to address it at that time.
MR. MCNEIL: We talk about BSE as if it's gone. The border is not even fully opened yet, but even if the border was fully opened tomorrow, there's still going to be an issue here of pricing and all those other things that the agriculture community is going to be requiring some programs and support on. Yet there doesn't seem to be any provision in this for that. I mean if you go under the premise that $14 million is based solely on BSE, you know, BSE is not gone yet.
[4:45 p.m.]
MR. D'ENTREMONT: If you really want to look at this number, ultimately we can't budget for what-ifs, yes, the BSE situation is still ongoing, but it's also a part of our commitment to use the APF and the CAIS Program to address these issues ongoing within the industry. We have had a couple of amendments to the program right now, through the federal-provincial agreement. We are working on a third one which does talk about negative margins and prepays and some other things that will make the producers more comfortable, but the APF and the CAIS Program will be how will we be addressing business risk management into the future. That's why ultimately, we can't budget for the things that will come up, like floods, hurricanes or BSE, so we have to be realistic in the numbers that we put forward in the budget.
MR. MCNEIL: I should have asked this question earlier when we were talking about the $40 million. I'm curious, all these numbers on the page, were you told to get a budget to the Department of Finance, or did the Department of Finance say to you, here's your $40 million, make your department fit?
MR. D'ENTREMONT: Ultimately the Department of Finance and the Treasury and Policy Board gives us a target to work upon. We took that target and that target, I think, when we started, was actually lower than what we've shown here, then we went to bat and we fought and we got the number that see before us today. I think we did our work respectively and maintained the budgetary implications within this budget, but yes, we are given a target. Then we have to work it.
MR. MCNEIL: Did you make it work?
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MR. D'ENTREMONT: Absolutely.
MR. MCNEIL: Regardless of whether you can provide those programs that we're talking about that have been obviously sorely needed in the last couple of years. Just on the BSE issue in the beef industry. The check-off program that was brought out a little while ago which I know didn't pass, I guess missed by a few, locally, I just want your sense of that and how important that program may have been?
MR. D'ENTREMONT: Well, we sat down with the cattle producers, the Cattlemen's Association sometime ago when they were interested in doing this program. Ultimately it was a vote to establish the Nova Scotia cattle producers under the National Products Act, in order to charge a $2 levy per animal. Going back a little bit, the Nova Scotia Cattlemen's Association is currently designated a commodity group under the Agriculture and Marketing Act with a levy of about $2 per head, however, that Act doesn't provide for enforcement of the levy. So there is really no way to force a producer, as he's selling a head of cattle, to pay that $2.
Under the national product marketing Act, if they moved under that Act, which would require this plebiscite and all of the things that have gone prior to now in this vote, would give the enforcement piece that we're able to go and enforce that legally to make producers pay the $2 per head, as was requested by the Cattlemen's Association, in order to do the things that they want to do. There's a fair amount of marketing that they were interested in doing. There were traceability programs that they wanted to work on and they wanted the industry to be able to provide that. That's why it went along this road, and then that would set them up as a commodity group, just like Pork Nova Scotia, just like the chicken farmers of Nova Scotia, just like the dairy farmers in Nova Scotia, who are all under that Act, and are able to charge levies.
MR. MCNEIL: My understanding of this is, if this program was in place across the country in every province, it would allow us to do a levy on imported beef from outside?
MR. D'ENTREMONT: Correct.
MR. MCNEIL: This is a major issue in Nova Scotia, I mean I don't have to tell you that, but I guess now that this has failed here, what steps is your department taking to move forward on this and see what we can do?
MR. D'ENTREMONT: Right now the national products Act or the national products marketing board is looking at options, legal options. Under the Act, it says that they must have two-thirds of that vote in order to pass that rule, in order to be under the national products Act. The vote came forward, it was 64.1 per cent, so we're almost there. The majority of producers did vote in favour of this levy system, but right now we're looking at
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the legal ramifications of whether or not we, as the department or Executive Council through OIC is able to levy this or not.
MR. MCNEIL: Has there been any talk with producers to ask why? I mean many of the ones that I spoke to didn't recognize the fact that if this program can be put in across the country, that would allow us to put a levy on imported beef from offshore, right? I don't know of a beef producer who would be opposed to that. One of the concerns I heard was the fact that every time the animal was sold, the $2 was on it as opposed to maybe the one-time fee when it came to the slaughterhouse and you paid, whether it be $5 at that point or whatever it happens to be, you pay it the one time at the end as opposed to at the beginning. It appeared to me that a lot of the people who were voting - I shouldn't say a lot, but some of the people in my riding that spoke to me about it were voting on something - I don't think it was sold to them. I'm just curious, because by the sounds of it, you believe in it, your department believes in it . . .
MR. D'ENTREMONT: The Federation of Agriculture believes in it. The Cattlemen's Association believes in it.
MR. MCNEIL: Well, we need some leadership of the department, I think, at this point, so are you going to be moving forward to see what you can do with this at this point?
MR. D'ENTREMONT: Right now we're looking at, like I said, the legal ramifications to see what we can or cannot do. We're also waiting for a request to come from the cattlemen saying, we'd really like you to do this, or we'd really like you to do that, and at this point we haven't received that. We are still in conversation with the cattlemen, they are still going back to their membership to find out what the feeling will be, and what they can or cannot do, or what they will or will not ask for. So we're still in that negotiating phase of seeing what we can. We have to respect that, ultimately, this is their vote, for them to get under this Act.
MR. MCNEIL: I appreciate that. You mentioned earlier about the Buy Nova Scotia product. What institutions right now could we, if we wanted to tomorrow, put beef into?
MR. D'ENTREMONT: Right now, the only ones that we should be able to hit into would be through the justice system, into our jails, because there are no restrictions for federally or provincially-inspected beef.
MR. MCNEIL: I'm going to tell my young fella, if he ever gets in trouble not to worry, that the government's going to look after him. They'll feed him, but if he goes to school, they're not going to feed him.
MR. D'ENTREMONT: They'll be well fed. Right now, if you look at how the system is set up in Nova Scotia and how the regular procurement systems work for buying food, there are only a number, a small handful of companies that provide these services to these
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plants, or to these institutions. As part of our procurement piece, and that is held within the Office of Economic Development, they are working with supplier development and working with these companies that provide meats and foods to the institutions.
The other thing, we're looking at this as beef. How many times have you gone to the hospital and had a prime rib steak? It's not very often, so if you look at the total consumption within hospitals, it's not as great as we once thought. There is some hamburger sold there. There are some prime cuts, but I think the quantity is not there that we had originally thought. The member for Hants East had alluded to earlier, that there might be some things we're not able to do because of the actual quantity required. Ultimately, that system is a very tight system in how it operates through other companies like CISCO and previously Serca, and those companies that did provide those products to the institutions. We're trying to work with those companies as well.
MR. MCNEIL: It sounds more like it was a good Sunday morning clip than the reality of the program. In principle and the concept, it's a great idea, but the reality of it is, and the Premier should have known this at the time, it's not as simple as saying, well tomorrow now we're going to be able to fill that program. It's just not going to happen.
When you spoke earlier, you were talking about the provincial and federal inspections. Can you give me a little explanation on the differences?
MR. D'ENTREMONT: I can get back to you on that.
MR. MCNEIL: In fairness to you, maybe if you would come back to me. That would be great. I find that is a big issue. On one hand we say the product is safe and I fully believe it is safe and there's no issue and we can eat it here, but yet, if you're in Moncton you can't eat it. We can blame the federal government if we wish, but there's a real problem there, why we're going through that. Is there any talk in looking at finding a blending of those services so that the producer is dealing with one level of inspection?
MR. D'ENTREMONT: I know, I'm sure that they have been talking to my compliance division and they have had that conversation with CFIA. CFIA sets the regulations for the federally inspected plants. If you look at the requirements, some of those requirements are very capital intensive, such as bathrooms in offices for the inspectors. In a smaller plant, for example Bowlby's Meats down in your neck of the woods, if they had to conform to that, they would be adding thousands and thousands of dollars to their plants because of these requirements.
MR. MCNEIL: But the reality is, government and politicians respond to pressure and there's not a consumer in this country that would say to you that is a sensible requirement. What I'm wondering is, how much talk is going on to try to find someway to remove the lunacy out of some of that to allow one level of inspection?
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MR. D'ENTREMONT: I know that I've had the discussion. I know my department has had the discussion. I don't know if my deputy minister has had the opportunity yet to bring that issue up at the deputies' tables, but I know there's got to be harmonization. We talk about harmonization, regulations between the U.S. and Canada, but we do have a lot more work to do in the harmonization of regulations right across this country. It would only make sense to me that some of these things would be the same.
The guys that have the provincially inspected plants are producing a quality product, are doing it safely. We have our program vets out there making sure things are done humanely, that things are done in the correct manner. They're being done right and we definitely have some of the safest meat in the country, to be quite honest.
MR. MCNEIL: Agreed. We were talking about the federally inspected plant which is almost ready to go on P.E.I. - is it close?
MR. D'ENTREMONT: It's close. As far as we understand, they're supposed to be opening it up to do tests in May or June. So it's going to take a couple of months to get the bugs out, but ultimately, this September is supposed to be the drop-dead date.
MR. MCNEIL: Early on we were, as a province, offered a number of hooks in the plant. My understanding was initially we didn't take them up on that. Do we have a set number of hooks in that plant that guarantee Nova Scotia producers have access to that plant?
MR. D'ENTREMONT: Right now, Nova Scotia producers actually own a good pile of hooks within the plant which they will have the opportunity to run their own animals through. I did have a commitment from the P.E.I. minister that they hold a number of hooks for themselves and that we can use those hooks if we need them.
MR. MCNEIL: Many of the large producers have a number of hooks there - I guess my concern would be for the small guy. So there is some ability to run animals through that plant?
MR. D'ENTREMONT: Absolutely.
MR. MCNEIL: Great. Just to shift gears a little bit, AgraPoint. John asked the question of where it was in the estimates and it's $2.2 million, right?
MR. D'ENTREMONT: Correct.
MR. MCNEIL: Who represents the department on the board, considering we're responsible for them. Is that my understanding from the question you had answered earlier?
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[5:00 p.m.]
MR. D'ENTREMONT: The board makeup of AgraPoint originally included the deputy minister, originally included the president of the college and originally included some other high-level staff. What we felt was that the deputy minister would be in conflict with some of the discussions that were happening at the table of AgraPoint because they're talking about programs and things that we need. Ultimately, I think, as a deputy minister trying to lobby government for more money or programs didn't make a whole lot of sense to us. What we wanted to do is bring it closer to our production people and our agriculture specialists. Now we have Arthur Pick who sits on the AgraPoint board, so there's a better appreciation on what's happening on farm and what kind of projects AgraPoint's working on and what kind of issues might be coming up within the industry.
The other point is, we took the president of the college off and we put on Dr. Rob Gordon - I forget what his title exactly is, but it was more on the development phase - so Rob Gordon is now on that board. The deputy minister or the president of the college can bring a certain amount of information to that board, but if you get people who are actually in the trenches and doing the work, I think we found a better opportunity for their input into AgraPoint, so we did make a couple of changes there.
The other people who sit on that board are appointed or requested appointments by the federation.
MR. MCNEIL: But Arthur is representing the department?
MR. D'ENTREMONT: He is my only representative, yes.
MR. MCNEIL: What are they doing with that $2.2 million?
MR. D'ENTREMONT: There are a number of services - production programs, support to farmers and things of that sort. The previous member did question it and we're trying to work on a list of things that they do for farmers for that $2.2 million. I have no problem in providing that.
MR. MCNEIL: I'm not interested as much in the fee for service because I would hope that the department is not funding any service that they're getting a fee for. That would be in direct competition with the private sector, which is why a previous minister gutted the department to allow the private sector to do that business. If that $2.2 million is not in programs that are directed on the fee for service side, what are you getting for the $2.2 million?
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MR. D'ENTREMONT: That issue has come up on a number of occasions. What we're doing is trying to get that listing of core services that AgraPoint is offering. They include identifying and acting on sound resource-based business opportunities, defining impact of applied research, effectively developing and managing client relationships. These are just some of the lists out of the document that we have on AgraPoint.
Ultimately, there are some core services that we as government, and we as Nova Scotians, would expect them to provide. We're still working on that list to ensure that we're getting the value for our $2.2 million.
MR. MCNEIL: I guess you will give me a breakdown of that $2.2 million and where it's going and what's happening with it. Thank you.
Just to switch gears a little bit, I was looking at the Farm Loan Board. I have a few questions surrounding - I'm jumping all over the place, you can tell I'm not as experienced as the previous speaker. On Page 97 of the business plan, last year was a profitable year for the Farm Loan Board. It's Page 97 and it's the Crown Corporation Business Plan. I'm just wondering, when you look at Bad Debt Expenses, it looks like $1 million to the good. I assume the parenthesis mean it's a negative.
MR. D'ENTREMONT: Apparently that wasn't the adjustment I think we talked about. In 2003-04 there was an adjustment for $1 million. So it goes back to one of your previous questions. What page are you on?
MR. MCNEIL: Page 97. I should know better than to try to follow budget lines.
MR. D'ENTREMONT: Here we go. Also not included in the board financial information of the above is the recovery of $1.055 million resulting from reduction and provision for doubtful accounts. I think that's probably why you're showing $1 million to the good.
MR. MCNEIL: Where did these bad accounts come from? Were they set aside, you yanked them off the shelf because we needed that set-up? Where do they come from? Do they sit there for a certain length of time? Do we look and say that our . . .
MR. D'ENTREMONT: The reserve account is something that is there on an ongoing basis that is adjusted depending on how much needs to be pulled out of that reserve account. It is adjusted accordingly every year.
MR. MCNEIL: Every year?
MR. D'ENTREMONT: Since I'm not a banker, if you need further information on that one . . .
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MR. MCNEIL: See, I don't have to, but you have to be. The other thing which jumped out at me, obviously, was the bottom net income of last year which was $3.2 million. I couldn't help but think how many times when I was around on the task force - and this is only one sector - we talked about the crisis that they're faced with and the fact of losing their entire life's work. Nobody from the Farm Loan Board has moved forward to say, we're prepared to do our part. I guess I'll ask you why?
MR. D'ENTREMONT: I've come out and said this a number of times that the Farm Loan Board will be a patient lender, they will work with all people that are experiencing problems to ensure that adjustments are made to their accounts to ensure they weather this problem through. In some cases, this has worked; in other cases, I'm sure some adjustments needed to be made. As far as I understand throughout this BSE problem, we haven't had anyone have to go off because we pulled the plug. We have been a patient and a very respective lender in this case.
MR. MCNEIL: It's one thing to say you haven't had anybody to go off because you pulled the plug. It's quite another though, and the reality is for many of these farmers, they're sitting there looking at a resource and heard that the equity has been cut in half overnight. They're sitting there realizing they can't keep up the pressures of all this building up around them and yet the interest keeps piling on a debt that they're not even meeting the means of. I'm curious whether anybody from the department said to the Farm Loan Board, I'm not asking you to forgive the debt, or did anyone come to you and say we'll suspend interest for a period of time until we can - maybe the other day when the border partially opened, did anybody from the department go to the Farm Loan Board and tell them this industry needs your support? Obviously, the Farm Loan Board was doing okay.
MR. D'ENTREMONT: I've had many conversations with our manager of the Farm Loan Board. He knows our intention to be the patient lender and to work through all crises. What you're talking about is exactly what's been done - to work with every producer to ensure that they weather the storm.
MR. MCNEIL: Being patient means that I'm willing to wait an extra year to get every last nickel that is owed to me on being a compassionate person when you're looking at the anxiety that many of these producers are going through over the last year. Is somebody saying, I'm prepared to help, I'm prepared to say I can't forgive you the principal that you borrowed, but I am prepared to suspend interest for a period of time until we, as a government, can help support this. Did anyone do that?
MR. D'ENTREMONT: No one did that.
MR. MCNEIL: You mentioned earlier about the New Entrants Program. What's the department doing for young farmers who want to get into the industry? New farmers, sorry, new entrants.
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MR. D'ENTREMONT: There is a New Entrants Program which, I think, is administered through the Farm Loan Board. Every year they get $600,000.
MR. MCNEIL: What does that provide?
MR. D'ENTREMONT: Funding to applicants is available over a two-year commitment, assistance is based on the amount of interest, the benefits paid out of the program should not exceed the lesser of actual interest rebate of qualified loans. If a new farmer has a loan through the Farm Loan Board, there are some pieces in there for the repayment of that loan. There's either actual interest repaid on qualified loans or $10,000 of forgiveness for that loan over two years - there's about a $20,000 investment for each farmer who accesses that program.
MR. MCNEIL: So the top end, the maximum, is $20,000? Would you say $20,000, $25,000?
MR. D'ENTREMONT: It's $20,000.
MR. MCNEIL: Okay. Is there any other - I'm sure there's always ongoing discussions, but is there anything ongoing regarding trying to encourage and support new people trying to get into the agricultural industry?
MR. D'ENTREMONT: Absolutely. That is one vehicle in which we can use. There are a number of other programs that not only a new farmer can access, but farmers as a rule can access. I sat down with the young farmers association of Nova Scotia at the last federation meeting and definitely access to capital is one that is very important to them. Buying a farm in this day and age and setting up meaningful production is an expensive endeavour and it's something I'm trying to take forward and trying to find some extra funds for. This budget year didn't allow it, but definitely something we need to address as a government in the near future.
MR. MCNEIL: On Page 3.3 of the Estimates Book, it's Net Program Expenses of Senior Management. It's interesting to note that the senior management of agriculture is $835,000. The Department of Education is about $635,000.
MR. D'ENTREMONT: If you look at Grants and Contributions, $392,000, that is grants and contributions to organizations like the SPCA, exhibition associations, and a few more that do go through that. That's probably something that's not in the Education budget.
MR. MCNEIL: But why would that be under senior management?
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MR. D'ENTREMONT: It had to go somewhere. I don't know the exact reason why it's there, but that's why it shows a little more than what you normally see, because of those grants and contributions. There's also a number of scholarships in there for the Nova Scotia Agricultural College. I'm just trying to get a list here of some of the discretionary grants.
MR. MCNEIL: You can give that to me at another time. That helps explain some of it. I'm not an accountant, but it seems an odd place to put an item of grants in terms of senior management expenses. I'm not blaming you, of course, Mr. Minister, for that. The Department of Finance should get some blame for some of that.
MR. D'ENTREMONT: Absolutely.
[5:15 p.m.]
MR. MCNEIL: Salaries and Benefits - I noticed there's an increase here. The estimate last year, $274,000, it's up to - if you're going from estimate to estimate - $305,000.
MR. D'ENTREMONT: Which line is that again?
MR. MCNEIL: That's the very top one.
MR. D'ENTREMONT: I think what you're seeing there is sort of . . .
MR. MCNEIL: You didn't get a raise did you?
MR. D'ENTREMONT: I didn't get a raise.
MR. MCNEIL: Okay.
MR. D'ENTREMONT: I think it's the deputy minister as well as the executive assistant's salary differences. It's a $10,000 difference on . . .
MR. MCNEIL: I agree, but not to belabour the point, there's a $10,000 difference between the forecast and the estimate. When we're justifying an estimate in another statement, we're comparing it to the estimates. At some point there has to be some consistency, whether we're going to deal with the forecast, which quite frankly is the reasonable one any ordinary person would do with as opposed to the estimate to estimate.
MR. D'ENTREMONT: Also, just to go back for the estimate, in the previous year,
2003-04, the minister had an executive assistant, basically a part-time executive assistant, so that estimate would show differently than a full-time executive assistant. It does show some adjustments in today's world.
[Page 40]
MR. MCNEIL: I'm jumping all around here . . .
MR. D'ENTREMONT: It's a good test.
MR. MCNEIL: Just one more. On Page 3.7 on the Supplementary Detail - it just shows the staff is going to increase by five. Where are the new people going?
MR. D'ENTREMONT: If you look at the estimate of 511.6 people to 512.6 people, that's showing an estimate increase of one FTE. Basically, they're transferred from Environment and Labour. We had been working on 507 . . .
MR. MCNEIL: You're confusing me because you're going from estimate to estimate again.
MR. D'ENTREMONT: The 507.9 shows the number of vacancies within the department that hadn't been filled yet. We have to account for them in the new year as we bring a few more people on line to offer other services in the department.
MR. MCNEIL: I notice there's a staff of 20.3 that's funded by external agencies. Just give me an example of that.
MR. D'ENTREMONT: Most of those are funded through the college, through the Nova Scotia Agricultural College. A lot of them are our research chairs, like the organic farming research chair, turf grass management research chair, waste management research chair, and a number of other chairs. Those people are being paid for partly by the federal government, also partly by the industry, so we show that funded by external agencies. So that's why that 20 comes in play.
MR. MCNEIL: The college, I think they have an increase of 11 actually. I guess this is one of those where you're going from estimate to estimate again, and then the other ones are just eaten up through, there's an increase of 11. Being new at this and the first time to have a look at this, one of the things that seemed odd to me would be that the Nova Scotia Agricultural College, an educational institution, was in the Agriculture Department budget in terms of - just give me a little explanation on that as opposed to why wouldn't it have been under the Department of Education?
MR. D'ENTREMONT: Definitely historical, the Agricultural College was set up under an Act for the Department of Agriculture at the time, and it's just a piece of history that's still with us.
MR. MCNEIL: I'll get a chance to ask some questions the next go-round, but I'd like to turn it over to my colleague, the member for Digby-Annapolis.
[Page 41]
MR. CHAIRMAN: The honourable member for Digby-Annapolis.
MR. HAROLD THERIAULT: Mr. Chairman, 10 minutes; if I don't get them all in this time, I'll finish up the next round. I don't think I'll take as long as my colleague here. Being a fisherman myself and probably Chris from the fishing community, we can go through these right quickly.
What I want to do is do a few little presentations, then I want to ask you the questions on them, and we'll go from there. According to the inshore fisheries groups, it seems like the provincial government is letting DFO do anything it wants with small inshore fishermen in this province. They are letting big businesses buy them up and in turn displacing and destroying much-needed jobs in this industry, and in coastal communities. The inshore fishery is worth more today than it was worth at any other time in history, and it is benefiting less and less in certain coastal communities as time goes by.
In the mid-1990s the Department of Fisheries and Oceans and their commercial licensing policy set out to provide an orderly harvesting of resources. It was also the intent of the owner/operator and fleet separation policies to protect the independence of the inshore fleet from control by interests such as processing companies. At the same time, these same processing companies realized that the ownership or control of these licences would guarantee a continuous supply of products, so the trust agreement was born. At the same time, independent fishermen on the advice of their accountants were encouraged to form companies for tax reasons. These independent fishing companies should not be confused with the larger processing companies. Small fishing companies are made up of a family-run boat in which the captain is the president of the company, the core owner of the licence, and the owner/operator of the vessel. The processing company is run by a board of directors and enters into the agreement with the owner/operator to buy all of their catch at a lower price and then share what is available at dockside.
There is, at present, one way to level the playing field of the independent inshore fishermen and that is to revamp the Nova Scotia Fisheries Loan Board. Make it accountable to the communities it is supposed to be supporting. The licence holders, as a demographic, are growing older and it is vital to this industry, and is well worth almost $1.5 billion to the economy of Nova Scotia, to be sustained and nurtured for the generations that will shortly be taking the lead in this fishery. To benefit the family-run inshore fishery, there should also be a limited number of licences available. This limit should be one licence per holder; such a limit will spread the wealth around and promote greater involvement in the fishery. Owner/operators cannot compete with large companies and their financial resources. More licences spread out with a limit to how many licences can be held will be healthy for the economy of all of the rural coastal communities.
[Page 42]
My question on that, is the minister willing to work toward revamping the Nova Scotia Fisheries Loan Board, so young fishermen in coastal communities of Nova Scotia will have access for financing fishing enterprises, and by doing so, help end these trust agreements? Go ahead answer that, I get ahead of myself.
MR. D'ENTREMONT: I want to thank the member for Digby-Annapolis for that. There are a number of interesting things that you bring up in your discourse there. If we look over the last number of years and what DFO has done with our resource and the way that they manage the fishery, they could have done a lot better, if you look at what their regulations are. The trust agreement piece, if we look at how that licence holder is able to hold onto that licence and the trust agreement basically came forward because of an access to capital. I'm going to get around to the loan board in a second. In that access to capital for younger fishermen, in order for them to get into the fishery, they had to get somebody to pay for the licence. The licence itself, since it is held by the federal government, is a non-mortgageable item. That basically comes down from the regulations from CCRA and DFO. These are some of the things that are coming in that fisheries policy review, which we've been participating in since its inception. We were the ones who were pushing to look closely at these trust agreements and the owner/operator situation.
The Fisheries Loan Board has made presentations to the federal government to look at mortgaging those licences. We've brought it up and I know that they've had a number of conversations and a lot of letters going by as well for that issue, but CCRA at this point, the federal government will not allow us to mortgage that piece of paper. So that's why we're getting into these trust agreements in order for that access to capital. This department I know has worked very diligently to try to protect the coastal communities and the fishermen held within it, to try to get that access to capital for the younger fishermen so those boats and those licences can stay in communities.
The other issue in access to capital that we need to be very cognizant of, if you're a farmer and you want to pass your farm down to your son, you are exempt to a certain point of the capital gains tax. In the fishery that is totally taxable. So your capital gains is a fair amount more. So those are two issues that I think if we can address those two issues, then the whole idea around owner/operator trust agreements will go away because the people who will be able to access the funding will be able to access the funding. I know my department has been working very hard to make sure some of these things happen.
MR. THERIAULT: Can the Department of Fisheries of Nova Scotia show me proof or documentation that you have sent to Ottawa stating that this province is concerned about these trust agreements in coastal communities?
MR. D'ENTREMONT: Yes, I'm sure I can.
[Page 43]
MR. THERIAULT: I only have a couple minutes left. I will have to wait to go to the next round.
MR. CHAIRMAN: Sure. If you want to close off your questioning right now (Interruption) You have a few minutes left if you would like, about three minutes.
The honourable member for Annapolis.
MR. STEPHEN MCNEIL: I just have a quick question he can answer about the CAIS Program and the negative margins which my understanding was when the federal minister was in town a few weeks ago, he mentioned that the federal government had a provision in that program that they were going to deal with negative margins. Does the province have anything in that program to deal with negative margins?
MR. D'ENTREMONT: There's an implementation agreement, amendment number three, which brings in the payment for negative margins and there are two other items on that, but it is on our agenda that there has to be a Cabinet document prepared for that and brought forward for OIC in order to do that agreement and I know that's in due process. So Nova Scotia is agreeing with the federal minister and as soon as I can get that OIC approval, we will be making the announcement.
MR. MCNEIL: OIC, what's that?
MR. D'ENTREMONT: Order in Council, so it would go through Cabinet.
MR. MCNEIL: That's one of the things I haven't learned yet. Hopefully, I will have an opportunity to experience that. So you will send that along to me then, some documentation around that, that's great.
MR. D'ENTREMONT: Once it's approved, yes.
MR. MCNEIL: But you also said it's based on . . .
MR. D'ENTREMONT: The implementation agreement, amendment number three.
MR. MCNEIL: Okay, can I get a copy of that from somebody?
MR. D'ENTREMONT: We'll give you as much as we can.
MR. MCNEIL: Great.
MR. CHAIRMAN: You have two more minutes.
[Page 44]
MR. MCNEIL: I will ask him an easy one then. The School Milk Program, where is that in the budget?
MR. D'ENTREMONT: Let's find out where it is, I know it's the same as last year.
This is the same. That wasn't cancelled or anything, but we will find out which item that is. Okay, if you look under Industry Development and Business Services . . .
[5:30 p.m.]
MR. MCNEIL: Where are you, which book are you in?
MR. D'ENTREMONT: Hold on, this is my book, but it would show in the Supplementary Detail if you look under Industry Development and Business Services.
MR. MCNEIL: Page?
MR. D'ENTREMONT: Page 3.5 and if you look under Marketing Services which gives you a total of $1.697 million.
MR. MCNEIL: How much of that is dealing with that program? Is that all that program?
MR. D'ENTREMONT: No, $400,000 of that would be the School Milk Program.
MR. MCNEIL: And that's equivalent to what it was last year?
MR. D'ENTREMONT: Correct. In the last two years that has stayed stable at $400,000.
MR. CHAIRMAN: Does the government member have any scintillating questions to ask?
MR. D'ENTREMONT: May I have a "Baker break"?