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HALIFAX, FRIDAY, APRIL 29, 2005

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

9:21 A.M.

CHAIRMAN

Mr. Mark Parent

MR. CHAIRMAN: We will start with the estimates of the Department of Agriculture and Fisheries.

Resolution E1 - Resolved, that a sum not exceeding $44,113,000 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, I think I will probably take 10 or so minutes to just do a quick little overview of the departmental activities of last year, into this year, and our planning. It's my pleasure to be here today to talk about the department. I would like to introduce you to Rosalind Penfound, who didn't get to sit with me last year but who is up for the activity here today, and also, from our Finance CSU, Weldon Myers. Weldon, of course, has been with us for a number of years, preparing these very extensive documents.

Today, I'll outline some of the past year's accomplishments and highlight the opportunities we hope to capture through our budget. As you're aware, agriculture and fisheries are important and essential to the economy of our rural and coastal areas. These industries have prospered because of the hardworking people who toil in the fields and on the water, and those who promote and bring these products to market. There are several policies that shape our department's programs and services, and these are, of course, the agricultural policy framework or the APF, as it's known. The APF looks at environment renewal, business risk management, food safety and branding, and the APF outlines the future direction of agriculture here at home and across the country.

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Nova Scotia continues to benefit from a strong commercial fishery, and over the next year the department will continue its participation in a national fishery policy review. Included in this work is the securing of multi-year access to fish resources and addressing issues related to the owner/operator policy. The aquaculture policy framework will set a long-term vision for Canada's aquaculture industry. It focuses on environmental monitoring and implementation of the national aquatic animal health program. Nova Scotia prides itself on its successful sport fishing industry, and the department continues to work with counterparts and volunteers to enhance fish habitat and recreational fisheries.

Now a little about who we are. The department mandate is to promote, support and develop the aquacultural, agricultural, fishery and food industries. The department is structured to best service the needs of the industries in four service areas, centralized policy, planning, communications, and the Nova Scotia Agricultural College. As well, AgraPoint International is an alternative service delivery operating at arm's length from government. Established in 2000, it provides technical advice to the agricultural industry and is managed by an industry led by a board of directors.

Here's a few stats on our industries. Together with the food and manufacturing industry, the agricultural and fisheries industries employ 30,000 Nova Scotians. Another 44,000 Nova Scotians are employed in food distribution and service industries. Farm cash receipts for 2004 have been projected at $455 million. The agri-food sector, inclusive of processing, contributes $695 million in value-added to the provincial GDP. The value of fish landings for 2003 was $801 million. All together these industries, primary fishing, primary agriculture, seafood products preparation and packaging, and other food manufacturers reported exports of approximately $1.4 billion in 2003.

Now a little about our connection to the government's corporate goals. Agriculture and Fisheries is committed to supporting the Government of Nova Scotia's corporate goals and strategic priorities: with health care as it relates to supporting healthier Nova Scotians by ensuring a safe food supply; with Education as it relates to building on the skills with Nova Scotia Action Plan and the NSAC; with building greater prosperity by working closely with businesses; with fiscal responsibility and accountability through achieving sound fiscal management; and with protecting what Nova Scotians value, sustainable resource development and environmental integrity.

I'll give you a brief overview of the department's business plan, goals, priorities and programs. In our 2005-06 business plan, we have outlined programs and services we will provide to support the government's corporate plan. Our goals and priorities are as follows, one goal is to provide environmentally and socially responsible development of agriculture and fisheries. We will continue to support the sustainable resource management of our industries through business risk management, insurance coverage, field extension services, lending services, product quality development, market services, code of practice for biosolid waste, aquaculture environmental monitoring, aquatic species at risk strategies, participating

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in the Gulf of Maine Council, restoration of freshwater fish habitat, proper rockweed leases, and the environmental farm program.

We will work towards co-operative agriculture, aquaculture, fisheries and food businesses that create economic growth and employment in rural and coastal communities. To do this we will increase the growth and value of the agri-fish and food sectors. We will increase domestic and international competitiveness through working on the U.S. border regulations, encouraging investment in rural areas, encouraging immigration and implementing the aquaculture growth strategy.

We will work on trade initiatives, Brand Nova Scotia and Taste Nova Scotia, value-added market opportunities, exploring expansion of beef slaughter capacity, promoting boat-building exports, and adapting tracking and tracing systems to meet specifications. Another goal is to provide for the orderly development of the agriculture, fisheries and food industries. We will further improve food chain safety and security, including public health, food safety and animal health disease prevention. We'll do this through our response to animal health and disease prevention, and improvement to the current livestock health regulations.

It will be a priority for the department to achieve further efficiencies in licensing. We will work towards regional delivery of compositional dairy testing services, and rationalization of laboratory services. We will provide programs and services, like fishery licensing and enforcement, laboratory services, food safety, animal health, fish health, and natural products marketing.

We will also review and revise departmental Statutes, regulations and policies. Another goal is to increase expertise in excellence in Nova Scotia's agricultural, agri-food and aquaculture industries through teaching, research, community services and youth development. To do this, we'll implement the Nova Scotia Agricultural College's strategic plan and continue agricultural outreach in 4-H.

Now let's talk about how we will do these things through our proposed budget. The 2005-06 budget demonstrates the department's commitment to the agriculture and fisheries industries and its employees. We will continue to provide important programs and services to our producers and fishermen. This year's budget will see services, program delivery, staff and operating abilities remain intact. In some areas we have enhanced services and program delivery through better management and focused priorities.

There will be a net estimate increase of more than $3 million for a total budget estimate of $49 million. Some of the new opportunities the department will explore in the 2005-06 year are very exciting. I'm pleased to share with you our plans for the implementation of the salmon restoration project. This $500,000 commitment will ensure the sport fish sector maximizes its impact to the lifestyles of Nova Scotians and the

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provincial economy. There are significant opportunities in tourism, health, commerce and community interest, which is lost with declining numbers of fish.

Another initiative is the Bioresources TechnoVenture Centre at AgriTECH Park. The Atlantic Bioresources TechnoVenture Centre will establish value-added products, processes and technologies to enhance health of humans and animals. A third project is orchard renewal. This $235,000 project will assist the apple growers plan for the future. We believe this is a great opportunity to help sustain this important Nova Scotia industry.

[9:30 a.m.]

In closing, I'd like to reiterate that Nova Scotia's agriculture and fisheries industries are key to our entire provincial economy and very important to our rural and coastal communities. These sectors provide employment and career opportunities that enable Nova Scotians to work in traditional industries, train in Nova Scotia, and live in rural and coastal areas. As these sectors evolve, they will require research, new technologies and education to strike the right balance between resource development for economic prosperity and environmental integrity.

Through the progressive 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. Education is key to our province's future. Nova Scotia is well positioned to provide educational opportunities through the NSAC. As you heard, the Department of Agriculture and Fisheries is an active partner and a responsible leader in Nova Scotia's agriculture and fisheries industries. With that short opening statement, Mr. Chairman, I would like to thank everyone for their time.

MR. CHAIRMAN: Mr. Minister, you're bang-on 10 minutes. You can tell you come out of the Roman Catholic tradition with its homily rather than the Baptist tradition with its long sermons. We'll turn to the Official Opposition and to the Agriculture Critic for the Opposition.

The honourable member for Hants East.

MR. JOHN MACDONELL: Mr. Minister, is it possible to get a copy of your statement?

MR. D'ENTREMONT: Absolutely.

MR. MACDONELL: I'd like to know, because I don't think I've ever asked, what's your vision for the Department of Agriculture and Fisheries? In particular I'd like to know what your vision for agriculture in this province is.

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MR. D'ENTREMONT: Thank you for the question. My vision for the department is a pretty simple one. It is to be accessible to all Nova Scotians, to farmers and fishermen, to have a better contact and a better appreciation of what they do on a daily basis and to have a better appreciation of what their challenges are. I know that's a bit of a tall order in some cases, because there are so many things that we're proposing to do, that we do on a daily basis, but I would like to see better contact with farmers and fishermen in this province.

The second piece of that vision is simply to let them be the leading industries in Nova Scotia, and continue to be the leading industries in Nova Scotia. These are foundation industries. Nova Scotia would not be here if it didn't have farming, if it didn't have fishing, and we want to make sure that it is going to be here for the long term, and try to keep the priorities in line with that quick vision.

MR. MACDONELL: What do you see as one of the major obstacles to the sustainability of the industry?

MR. D'ENTREMONT: I think the obstacles - there are a lot of obstacles, and they change, basically on a weekly or daily basis, based on new diseases, what are the new challenges facing our primary industries. A year and a half ago I don't think we would have thought our industry could be so affected by something called BSE or certain animal health problems that we're having in aquaculture and other industries. So the biggest challenge is to try to get beyond crisis management, which a lot of these things really fall into, and get into sustainable development. We really need to find that line between those two pieces, and it's a challenge on a daily basis, what kind of manpower you have to apply to each of those things so that we do get the job done at the end of the day.

MR. MACDONELL: What do you think the fine line between them is, crisis management and sustainability?

MR. D'ENTREMONT: I'd rather be spending the majority of our time on sustainability and trying to grow industries, rather than crisis management, yet I think we've found, in the last few years, that we're sort of in crisis mode in trying to provide funding for a variety of different problems within the industry. We talk about the $8.9 million that we were presented back in December, we talk about the $2.5 million we were provided September past. It's just continually that we sort of have to put the brakes on for a minute, look at the industry, look at the challenges and try to provide the funding required, in a lot of cases to get through the Winter, to get to the next uprising in the industry.

What I'm seeing right now is a fair amount of optimism within the industries right now, and hopefully we can keep it going in that direction, barring any other problems falling from the sky.

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MR. MACDONELL: If you look in the Supplement to the Estimates, Page 3.3, Agriculture and Fisheries, you have 2004-05 Estimates and Forecast, and under Programs and Risk Management, $10,187,000, and then the Forecast was $18 million. Over on Estimates for 2005-06, you have $10,199,000. My question is, if you look at your estimates for those two years, they're fairly similar, on the line item for Estimates for Programs and Risk Management, but the Forecast number for 2004-05 is $8 million higher. I'm wondering, do you think the crisis is over in agriculture?

MR. D'ENTREMONT: I don't think we think the crisis is over, I think we feel that should things go well, and we always need to be optimistic that the industry will pan out to be a good year - I think most farmers I know are very good optimists. I don't want to say that we're going to sit there and try to figure out what the next crisis is going to be, and try to really plan for a crisis. I think what we really should be planning for and spending our time on is sustainability and the future of the industry. What you see there, if you look at the numbers, the $10,187,000 versus the $18 million, it's simply the bump that we got with the $8.9 million that we provided back in December.

I think through the APF, through the CASE Program, through our Business Risk Management Programs that we do have in place, they do reflect the reality of the industry, should things go relatively well. There's still a lot of room in there for issues as they come along. I think that's why it reflects it in the book this way.

MR. MACDONELL: So, are you anticipating another $8 million to $10 million coming this year, because there's no evidence that the BSE crisis is over? That money in December was really to address the cattlemen and the sheep producers, what they have been dealing with. They were stretched beyond the limit. So there's no clear indication, actually this Spring, with the injunction in the United States that really has allowed the border to stay closed. My concern would be that we had better batten down for the long haul. Is it your plan to put $8 million or $10 million a year into the industry, because I'm not sure but I think producers would say, well, that paid the bills but there's nothing coming over the hill to really resolve this problem?

MR. D'ENTREMONT: I think there's a number of things there, quite a few items that we should be talking about. BSE has been a challenge for all of us. I think the reason why Nova Scotia has had sort of a difficult goal, we seem to be one step away from the rest of the industry in Canada, so it takes a longer time for us to react to certain problems because of our slaughter capacity, because of other things. Also, I've found, from sitting around here for a year and a half now, the cattle industry in Nova Scotia was a bit fragmented, the red meat industry was, not necessarily with pork, because they had a group. Graham Reid and his folks over at the sheep producers are pretty well organized, but they're sort of on the fringe of things as well.

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I think what has happened in the last year and a half is you've seen a very substantial change in the direction of the Cattlemen's Association and the way that they've been able to get themselves set up. We have really good optimism in the plant in P.E.I. We have tremendous optimism in the new marketing programs that the cattlemen will be providing through the funding that we gave to them; out of the $8.9 million, the $500,000 that we provided to them, in making the red meat industry a better industry.

We also have to look at providing better slaughter capacity within this province as well when it comes to culls. I think at the end of the day, hopefully in the very near term, our industry is going to become more and more self-sufficient within its own borders and with very little reliance on exports to the U.S. I think the funding we have provided and will continue to provide will make that industry stronger. I think at the end of the day, the pressure will alleviate on the other side of having to provide business risk management models and funding through that vein to try to fight crises. I think we're moving very steadily towards that.

MR. MACDONELL: I have one question and then I'm going to make some comments. I'd like to know exactly what happened or what the plan is with the $500,000 that went to the red meat sector? My understanding was the $500,000 was to be used more to define a vision for that sector for planning. It's not clear to me that - I'm not privy to the meetings you're privy to - those that participated, the stakeholders, actually thought the $500,000 was going to go to the cattlemen. I think there was some surprise that's where it landed. What was your initial intent how that money was to be coordinated, what the plan was for that money, what were you thinking?

MR. D'ENTREMONT: Basically, it was for industry development. I felt that industry development meant having a stronger cattle producers' association, which is why we provided them the changes to the piece of regulation that was provided to them in order to set them up as a cattle producers' association, a real marketing group.

From the discussions that we pulled together back in November of last year, we did have $325,000 that was to go to the pork industry and it has; $8 million or so that was going to go as direct payments to producers and then the $500,000, of course, that was to go through processing capacity building initiative is what we had been keyed to from those meetings. Our document - I can provide this piece as well - that was processing capacity building initiative through cattle producers.

Back from November, December it basically was destined to go to cattle producers. At the same time, there was a discussion from the red meat sector that we were trying to pull the red meat sector - we brought them all together back in January to look at the industry as a whole, all red meat and then try to find a strategy for them on a go forward basis. That discussion still continues. There is funding through our marketing group to provide a real red meat strategy which is being worked on. At the same time, we have this $500,000 that was,

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in my estimation and from my understanding of the original meetings, to go to cattle producers.

If you look at the proposal from the cattle producers - I apologize for not having a copy with me here today, but I would endeavour to have one for you - it did have a number of things in it. Number one was about $150,000-odd to set them up. They need, of course, some office space, they need to hire a director, get some marketing promotional stuff in line. They really are, not necessarily starting from scratch, but just next to scratch. We wanted to provide them with some bridge funding until they were able to levy that $2 marketing levy.

In it also, there was the possibility of buying hooks. There was a proposal, I forget the amounts in it, to buy hooks in the P.E.I. plant. Therefore, they can either loan them out, rent them out or whatever the deal was to the cattle producers themselves. There was some marketing money in there as well. As I said, I will try to make sure that we'll get the rest to it.

[9:45 a.m.]

We also have an agreement with the cattle producers that they would talk to and include sheep and dairy as well. If you look at how the structure of the new cattle producers' group is, it does include a dairy person on their board of directors. We're trying to find a way to get the sheep in there as well. They have made the commitment to include them as well.

So the $500,000, even though it has gone off to the cattle producers' association, is there for the benefit of all red meat.

MR. MACDONELL: Okay, would those stakeholders in the other red meat sector have thought it was going to the Cattlemen's Association? They seemed to be quite surprised when it happened and so it seems if there was a discussion with the red meat sector, there really shouldn't have been any surprise for them. Then when you say we're trying to get sheep a seat on the Cattlemen's Association or that board, it seems to be kind of ridiculous, you only have to take the "b" off bovine to get ovine, but I think it's going to be a stretch.

I guess what I'm saying is that I'm not knocking the initiative when you're willing to put money up for industry development. I applaud you for that. I think that to a point, you were listening. I just want to be sure for the other stakeholders there is enough flexibility there for industry development for their industries as well. God knows, the cattlemen need help.

I want to touch a bit on a number of things. You mentioned the plant in P.E.I. and your notions of optimism. I'm not optimistic, I'm really worried, I have to say, about the industry. The reason I'm worried is, I don't see a vision. What I've seen in my experience of being the Opposition critic - I should say the New Democratic Party critic - I won't wrap

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my colleague from the Liberal caucus in all my comments, although I'm sure he'll agree. I'll look forward to hearing that on the record.

I want to say that what I've noticed is a government that really has tried to divest itself of much obligation or responsibility to this industry. Number one, to mention the plant in P.E.I., but the province was offered hooks and didn't take them originally. There is a major problem for producers in this province. If we look at the greying of the industry, if we look at the reduction of the industry, if we look at Stats Canada and the reduction in producers year-to-year, we're not growing this industry.

I think if I was minister, the first thing I would want to do is to say, we're going to look at the reasons people are leaving and are there programs or policies we can put in place to stop that? Let's not make it any smaller. Number two is, what's coming over the hill as those positive areas that we should be trying to put incentives to grow the industry, or help grow it. Maybe the producers are already showing where they think the growth could come and we need programs in place that would assist them in doing that.

Now, the number one thing that indicates the government wasn't interested in that was when they cut their technologists and specialists. A friend I spoke to about the Bee Industry Act, he was saying how much they missed the specialists in the department that their industry relied on. One problem cattle producers here are going to have, even if they got access to the P.E.I. plant - you're right, it doesn't take care of the issue on the culled cows, it doesn't take care of anything over 30 months, which there is a glut, but it doesn't pay the producer.

I mean they want to be global players, they want to market in the real world, and the real world right now means you don't pay producers for beef and that I see as the number one challenge. You mentioned about challenges to the industry, that's the challenge for producers, it doesn't matter if you're growing cucumbers, it doesn't matter if you're growing lambs, it doesn't matter if you're growing feeder calves, it doesn't matter if you're finishing cattle, it doesn't matter what you produce, you've got to get a price out of them that is representative of your cost of production so you can make money. If producers could get that, they would grow their own industry to whatever the market would stand.

Now, to me, if I look at agriculture and I look at producing widgets in a business park anywhere in Nova Scotia, I know if I make my widgets and I put them on the shelf, they'll probably be good in a month, but a cucumber won't. So if you take into consideration weather conditions, perishability, all of these things, these are the things where producers need support through a department to help them with that, whether it's through capital for infrastructure, et cetera, but if they could get their price and compete in a market the same as everybody else who produces other types of goods, whether it's tires or whatever, they would be fine, but they have all these other factors that other industries don't have to contend with that affect the ability for them to market or even produce a product, put your seeds in

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the ground in the Spring and not have a notion of what obstacles you're going to run into between the planting and the harvesting and purely be a gamble.

So I see, number one, if it's possible for the department to intervene on some way to improve the price structure function in the marketplace so that more of the consumer dollar could go to the producer, and you're going to have a difficult problem doing that, Mr. Minister, and that's not your fault, I think maybe well intentioned in the Interprovincial Trade Agreement, and I thought maybe I had found a loophole, in Chapter 6 on investment there is room to bring about buying local under a regional economic development program, but in Chapter 9 it's fairly restrictive and it's based on agricultural product that you cannot restrict the movement of agricultural goods unless it's for sanitary and phytosanitary health reasons.

So one thing I would ask you, Mr. Minister, is that when you're around the table with other ministers and if you have input, and I'm sure these interprovincial agreements, there's probably a little bit of negotiating going on all the time, people trying to move the agreement in a certain direction, but this is one that actually I think all Ministers of Agriculture should have some discussion to at least get some upward limit - 25 per cent, 50 per cent - whatever you can bargain for local content in your marketplace without any penalties or restriction.

Now, if you're a local marketplace, if your producers can't hit that 50 per cent target, well, you know, then the market can bring it from wherever, but I believe the price for producers is in the showcase and they can't get it, they can't access it. If you look at Pork Nova Scotia as an example, a marketing board that goes to the Natural Products Marketing Council, they can negotiate a price, the council can agree with them and they can charge that price, but in the real world Larsen's or Maple Leaf can say, well, we're not paying it. So more and more of the percentage of the price for producers has gone to the retailer side, a greater monopolization of the retail sector, and there are really fewer and fewer places for farmers to sell their product and then the whole structure around the selling, you know, to take it to New Brunswick to the major distribution points so they can spread it out or deliver it to the Atlantic Region. There's just no more driving up to the back door of the local Sobeys and unloading a truckload of cabbages.

That's not to say that the world has to be like that, but certainly there are ways that this could be addressed. I think this is a road that producers would be willing to go down, but they're going to need some help and I see that as the biggest challenge for producers and actually governments are going to have to step in to try to roll back a little bit of those agreements so that they actually can get some leverage. So I would be interested to hear your comments on that.

MR. D'ENTREMONT: This is an issue I think that has been there for quite some time and I think over the last few years we've seen a tremendous amalgamation or a rationalization of the retail industry, of the Sobeys, the Superstores, and all those things

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getting bigger and moving their buying capacities and those things to central Canada and those types of things. I had a good conversation with the member for Kings North not that long ago, talking about his producers as we start to get seeds in the ground, that they're starting to have discussions with some of their local retailers, and there's a whole myriad of new regulations that they are trying to put in, you know, there are certain marketing surcharges, returning fees, penalties, and it's getting really confusing. Also the Honourable Cecil Clarke had sent me a letter as well referring to one of his local buying groups, the Bras d'Or producers, and they're having the same type of problems in trying to sell some of their vegetables.

So in reply to those two conversations and that letter, we have an upcoming meeting with retailers this time. I think for some time we had been sort of trying to deal through the grocers' association, but I think I'm going to change my tactic there a little bit. I want to see some of these guys eye to eye and have a good talk about buying local and how to get some of our local products into the Superstores and into our local retailers and I think this would be a thing. I've talked about this on a number of occasions in the House and to different groups.

I would like to be like Quebec in a way because Quebec for some reason seems to have this one figured out. I did find a little bit out about how they do it, yet I don't know how effective we could do that, but basically they send their health inspectors apparently into their grocery stores and sort of ask for certain things. Anyway, that's neither here nor there, but it's an interesting piece of information on how they try to because then they get into sort of that Chapter 6 loophole for the reasons for buying local. I think it's an interesting one to look at. What we can't forget also is that the Council of Atlantic Premiers has sat down and was more looking at an Atlantic zone and finding ways that we can have local products in our local stores.

You brought up when we sit down with ministers, that we should be talking about interprovincial trade, and we do talk about interprovincial trade, but I think we do get bogged down a lot on talking about international trade because we still have a lot of supplementary import permits and those types of things that were bringing in beef, lamb and other red meat products into Canada and we're trying to get the federal government to try to cancel them or try to find a way to stop that bleeding, if you may, on that side. But I think over the next few months it's going to be my priority to try to get talking to these retail folks to try to find ways to get those products in without having to talk about legislation or things like that which are actually in contravention of those interprovincial trade agreements.

Ultimately, you know, if a guy is growing turnip in the Annapolis Valley or in Cape Breton for a generation or two, they should be able to sell their products at the local retail stores. We've been spending a lot of time on that. There's a number of funding programs within our marketing department to help groups along in trying to access markets, trying to

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value add their products to do well, those types of things. I think for me as minister is to really sit down with some of these groups and try to find the path to get the products in there.

[10:00 a.m.]

MR. MACDONELL: Well, I'm glad to hear you say that. I think it can be done, and I think that it has to be done on the notion - at least my thoughts around it are not to punish the retail sector. They're dealing with a world in which they live and whatever controls they can get, I'm sure they're going to want to get them, and there's a point to which I say, you can't do that anymore. I don't want to see them limited. My thought was around legislation for sure, but I wanted them to be able to get the quality that they wanted in Nova Scotia and I didn't think that they should - if you legislated buy local and gee, they said, we'll need triple a's and they weren't here, well, we don't have to take them, we don't want to take them. I don't think they should be forced to do that. I think the requirement, for me, would be that they buy local but they shouldn't be punished. Buy local first for what's available number one, and then if the producers can get their price they'll grow the industry, but it has to be at a quality that they need to meet what they're trying to for their consumer. They're trying to run an industry as well.

The points you made are good ones. The thought I want to leave with you, if you walked into Sobey's or the Superstore and every item, every bit of produce, everything you saw there was Nova Scotia produced, that's not good enough if farmers are in poverty. What I'm asking for here is not just access. They have to make money doing this, and that's the one thing, as far as I can see, they don't control. The industry for a lot of them may be small but it would grow if they could make money. The same as other entrepreneurs, they would invest. There's probably some truth in the statement, Laurence Nason has said of a farmer who said, I don't have a child I hate bad enough to leave the farm to.

In rural Nova Scotia, this is important. In my constituency, we produce 30 per cent of the milk in the province. That industry is actually a supply-managed industry, the same as eggs, chicken and turkey. Turkey is another one that has some problems, but those supply-managed industries have withstood the test of time a bit, and they do have problems associated with them and in particular for the milk industry, it's the price of quota, and the operations are getting so large they can't sell them anyway. That industry does have some things that it battles with, but it pretty well produces the lion's share of Nova Scotia's milk that's consumed, but the processing side in that industry is becoming more and more monopolized and I know they really worry.

There's a lot of wealth from rural Nova Scotia that winds up in Halifax. It would seem to me that if you were to take those raw resources of producing agriculture, forestry and the fishery, and you remove those from those rural communities, then this economy, as much as people don't seem to - I think those three make up about $4 billion in a $20 billion GDP? It might be $22 billion the GDP? Anyway, roughly, that's what they amount to. So people

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tend to give them short shrift. They tend to think, well they're not a big part of the gross domestic product for the province, but the service side and government salaries, they cannot carry the economy without that resource sector, and if I look at communities in my area, there are young families there that are associated with those resource sectors and in part, keep those schools open, allow for teachers' salaries, allow for a health clinic, not to mention the gas stations, if we can keep them open. The government actually comes up with policy throughout all of its departments, Health, Agriculture and Fisheries, Education. They tend to look at these things because to put $10 million into the beef industry last year and the possibility that if you had to do it again this year, that's not sustainable. So if it's possible for producers to get the money that they need out of the product they produce, that is sustainable, and that can sustain communities.

I think that your conversations with other ministers, and you mentioned the Atlantic Premiers and I know there was an initiative by the Atlantic Premiers to try to see if there could be some work done on this. This is for naught, unless producers can make money. Unless they can get their price. We can fill all the stores in Nova Scotia with product that's produced in Nova Scotia, and if doing that keeps farmers in poverty, we haven't gained anything.

It's never been clear to me, whatever happened around the - I know there's an MOU with AgraPoint and my colleague, the member for Annapolis and I, we met with you last year. Can you can give me in broad strokes, what that MOU says?

MR. D'ENTREMONT: I just want to make a few comments about some of the comments that you just finished making. You're bang on when you say access at a fair price, but right now we don't have access, so you sort of have to try to build two at the same time. The industry is an older industry. The average age of a farmer is, I think, 57 now, which is far too old, but depends on which industry they're in. If you look at if you're a supply-managed commodity, I was lucky enough to be in Skye Glen the other day and met with a 23-year-old dairy farmer who just bought his farm, which I think is tremendous but I don't know how he will find the capital in order to do these things. Further to the $8.9 million I think in total during 2004, we provided almost $20 million to beef red meat producers, through the different programs that we do have. It's true, that's not sustainable through the future. It goes back to the first point that I really wish I was spending at least 80 per cent of my time with industry development and those types of things, the other 20 per cent on business risk management.

In reference to AgraPoint, there are a number of things that have happened. Of course the MOU has been signed and the basic premise on this one really falls from the discussion here in estimates of last year, when we looked at the Supplement to the Public Accounts and seeing additional payments and costs to ADI, and just for the information of the people here today is, there is one payment in there to ADI, I think there's two, the main one which is the $2.2 million that was provided and then another contract, but that's again prior to the MOU

[Page 14]

signing.

Basically what it does is it reiterates the reasons that AgraPoint was created in the first place, not necessarily to replace but to try to fill a void of the Production Technology Branch and to provide extension services. So the agreement, basically, and not to get into the whole details of it because I really don't have them with me, but simply to make sure that when a farmer calls in for work, that they need help. If it's going to be deemed as a real extension service, the funding will come out of the $2.2 million. There will be no added cost to the farmer.

So what we're seeing so far is it's been relatively successful on that. I can provide you with some more information on that as we go. I can look at a bunch of Q & As here, but it really doesn't provide the information that you would require.

Activities for which no fee is charged, and this probably would help a little as the 1-800 call-in referral service, the resource contact centre - and we also need to remember, from that referral service, you can get referred to a specialist within AgraPoint or a specialist outside of AgraPoint. So there's an added piece there, so that those consultants who want to belong to the group, they can get referrals directly from that 1-800 line. Specialized agrology services - Sean Firth, who is our bovine specialist, not our ovine specialist. That takes out a 'b' which makes quite a buzz. Organizing industry events in commerce, there's participation in task force committees and basically trying to be our agrologist. That's the service that they provide to government, directly, and participation, of course, in research, education and technology transfer.

But I think the biggest thing that we had lost from Production Technology was some of our own very important agrology advice. We lost that. So the MOU does outline it. Should we require, in testimony, when we do need that advice of an agrologist, we just need to give them a call and they'll be in to help us out as well. In all, it smooths off some of the misconceptions and some of the things that might have been going on in the past. We're very hopeful that they'll grow and be able to help the industry, as they were originally designed to do.

MR. MACDONELL: Two questions, then. I think maybe last year, in Question Period, I had asked if you could give me a list of what services are charged and what are not, and what the fees are, which you said you would. I think we're pushing 12 months. I'm not one to harp, but . . .

MR. D'ENTREMONT: That's a tad long.

MR. MACDONELL: Now you mentioned about specialists outside of AgraPoint, that if the question couldn't be answered within AgraPoint, it could be by a specialist outside of AgraPoint. I'm just wondering who those people are. Are they the other part of the industry,

[Page 15]

who seem to be kind of upset with AgraPoint? Are these other specialists, other consultants, other companies that feel they're competing with an agency that's funded by $2.2 million and they're not? How does that loop work?

MR. D'ENTREMONT: Basically it can happen in two ways. Let's say you're looking for a service, like your environmental farm plan, and you would rather use an outside consultant rather than using the person - they would make that referral and get it done in that respect. The other thing is that we don't have a specialist on everything in AgraPoint. Should we require the services of someone else, we will go outside of AgraPoint, hire a consultant to get the work done for our farmers, out of the $2.2 million.

MR. MACDONELL: So, do you have a fee structure? Does that person then just charge? That could be an independent company.

MR. D'ENTREMONT: They would charge their going rate, as far as I understand. I'll endeavour to find that information for you.

MR. MACDONELL: So does that come out of the $2.2 million, or does the farmer pay that?

MR. D'ENTREMONT: It depends on what it is. I'll try to get that information for you. There's a fine line between production technology or between extension service and benefit. I don't know exactly where that line is, and I really probably couldn't explain it to you. But when it gets beyond, to be that benefit to you, to make you more money, then you sort of get into a fee-for-service. When you get into you're having a problem with your cow or you're having a problem with anything and you need some specialized services, then that funding would probably be free. I'll endeavour to get that fee structure. I'll try to get it to you before 12 months hence. I'll try to get it for you in a few weeks.

[10:15 a.m.]

MR. MACDONELL: Could we work with 12 hours and then see . . .

MR. D'ENTREMONT: We'll see where we get.

MR. MACDONELL: Well, I'd be interested to know that. You mentioned about AgraPoint, two payments, $2.2 million and another payment. I haven't picked that up. So what's the other payment? How much is it, and what's it for?

MR. D'ENTREMONT: If you remember last year, there were probably four or five payments to ADI, the predecessor to AgraPoint. In this case there was a payment of $6,000. This amount represents payment of instructional services for the Atlantic Crop Advisory Course offered through Continuing Education of the Nova Scotia Agricultural College, staff

[Page 16]

training in regard to fine tuning poultry management for today's boilers, and workshops for Plant and Animal Science Department of the Nova Scotia Agricultural College. It was a second contract that we probably asked them to do on our behalf that we ended up paying for. This is pre-agreement or MOU. That type of thing, in my mind, would be covered under it, hopefully from this time forward. I can never be certain on everything, but there'll be one payment of that $2.2 million.

MR. MACDONELL: So, did you not realize that all the $2.2 million wasn't being spent? I'm curious, what parameters do you put on the $2.2 million? If they spend $1.2 million, and they're left with $1 million, does that go back to the province?

MR. D'ENTREMONT: Basically, the way that AgraPoint was set up is through a board of directors, representative of the industry. Basically the idea is that, in the case of last year they pretty much spent every cent they had because of AgraFest and a couple of initiatives that they did. In the past, and I think that's where you're coming from, there was some surplus there. It is the intention of the department and also the intention of the board of directors to use that money on industry development and industry items. It might float in their accounts for a year or so, but the intention is to use that money totally for the agriculture industry.

MR. MACDONELL: I'm just kind of thinking about the $500,000 that went to the red meat sector. Do they have to show you a plan? Do they have to show you anything?

MR. D'ENTREMONT: Yes, there's a business plan submitted every year.

MR. MACDONELL: Okay. So the business plan you have for this year, does it account for all of the $2.2 million?

MR. D'ENTREMONT: Absolutely.

MR. MACDONELL: And when I say account for all the $2.2 million, I don't mean . . .

MR. D'ENTREMONT: It's defined in general terms, here's where we plan to spend.

MR. MACDONELL: They're not saying $500,000 - they might account for $500,000 left in the account and not spent just by saying we didn't spend it, so that's kind of accounting for it. There's nothing like that indicated, that they're not going to use all the money.

MR. D'ENTREMONT: Exactly. I think if you really look at how, over the last year and a half or so, when Sean Firth had been helping cattle producers get set up and work on the marketing levy and stuff like that, I think there was a fair amount of funding coming out

[Page 17]

of that $2.2 million and even probably out of that surplus that they had left over, helping to fund that. I think it works out very well in the end for the industries.

MR. MACDONELL: I'm just thinking, if Sean Firth worked for the department and drew a salary would it have cost as much?

MR. D'ENTREMONT: It probably would have cost us more to have Sean Firth working directly for the department than it would for AgraPoint, because, of course, he has other responsibilities within AgraPoint. I think the alternate service model has proved to work out not so bad and they just needed this MOU tune-up in order to really give the direction of production technology or agrologist services.

MR. MACDONELL: What are you using for your barometer to measure your comment? By and large, the people I talk to in the agricultural industry have not really been favourable for it. A lot of them don't use it, a lot of them don't see it addressing their concerns. When Pork Nova Scotia was before our Resources Committee, the last time they were, anyway, that question was put to them and it was no big advantage for them.

MR. D'ENTREMONT: Over the last year and a half we have had a lot of discussions in respect to AgraPoint and we did hear a lot from both sides. We heard a lot from the independent consultants, we heard a lot from certain groups that didn't use it, and we also heard a lot from the people who did and really appreciated the work that they did.

As we went forward in the MOU set-up, one thing we wanted to ensure was that the federation and Council of Leaders endorse this. The Council of Leaders had a resounding endorsement on the MOU and how AgraPoint will be working now and into the future. I use that as a barometer of how things are and the low volume of letters that I'm getting now, because there was a fair amount of correspondence coming from all sides on AgraPoint. I'm pretty comfortable now that I think we've gone in the right direction. Time will tell as we monitor this for the future.

MR. MACDONELL: I'm not sure that I have a good memory of the present MOU, but it struck me that when I finally realized you had signed one, that it was markedly different from what the discussion was the day at your department. I'm curious as to why there was what appeared to me to be a change in direction?

MR. D'ENTREMONT: There was a couple of things that happened. As we had presented it to you, we had submitted it to the board of directors of AgraPoint, which precipitated the resignation of one of them, in particular, and another one, that rallied a number of producers in asking for some changes to the way that it was structured. We feel that was a loud enough voice to rethink some of the things that we had asked for or done within that agreement. We redrafted it and we feel that it is not that far different from the original presentation. I think it clarified things a bit more. We then subsequently took that

[Page 18]

memorandum of understanding to the Council of Leaders and brought that as a presentation to them to get their input on things. They gave us an endorsement on it to have it signed and work it into the future so it is a little bit changed, a little bit different and I would endeavour to invite you to have another sit down and talk about what's really contained in there line by line, and you can ask the questions of the folks that did the drafting.

MR. MACDONELL: I'd really appreciate that, actually. It would tend to make me think that if the first version caused that kind of reaction in AgraPoint that you may have written it right.

Something I wanted to move on to, because I'm a sheep producer, I have a purebred flock of Suffolk sheep and a few - three, I guess - registered Horned Dorsets. The last three years, I've been involved with a program being funded by your department and it's a scrapie research program. It has really been a helpful program, I think, for producers in this province. Dr. Farid from the Agricultural College has been doing the research.

All the purebred flocks or anybody who is interested, actually, in participating - and I can't see a reason why they wouldn't - their flocks were DNA'd because the basis of scrapie

is a prion molecule similar to the BSE but there's genetic resistance. Actually, I'm curious whether or not there has been much research done to find out if there is genetic resistance to BSE. There are those animals that have a genetic resistance and that's what we try to identify in our flocks and breed more for resistance.

The CFIA is presently - I don't know if their program is up and running but the last meeting I was at they indicated that what they wanted to do was have a pilot project, I think 60 flocks across the country, three of those flocks would be from Nova Scotia, and there's quite a bit more work for producers in that program. The word is, if I have it right, is that the Americans tend to be saying that they will be scrapie-free by 2010, I might not have the year right but I think I'm right. I see this as the potential for an excuse to keep the border closed. If they opened it for beef they might close it for sheep again.

I guess what I'm asking of you is, when you're sitting around the table with the other ministers, to encourage them to do something similar to what we're doing here in Nova Scotia. If they're from Ontario, they might say, well we have such a bigger industry, it will cost us more but I'm sure their budget is bigger, too. I don't see that the federal program is actually going to do it. The way that program is spelled out, I think they'll only blood type animals that are registered and presently, in our program, there's a research experiment to relate their rate of gain with scrapie resistance. Once your flock is done, your breeding stock, then you only have to do the lambs.

Presently, I'm in my third year of having the lambs done based on that project. I think the other provinces could probably do similar programs, have them up and running and have results much faster, to hit that 2010 timeline. I think the federal program is a five year

[Page 19]

program, it's only a pilot and it's only doing 60 flocks across the country. I would say by the time CFIA - if they do jump into doing all the flocks - it will be years off the mark, I think, compared to where the Americans say they're going to be. I'm a little worried.

Since my flock is a purebred, registered flock, it was kind of my hope at some point to be able to advertise in the eastern United States but for me, I still do freezer orders, so if it doesn't go there it's not that terrible. I certainly would see on the commercial side for lambs going across the border that this could be a big problem.

I would like you to carry the message of what the department is doing here that I think is a very good thing and not a terribly expensive thing. I think the other provinces should look at it. I've talked to enough producers across the country whose provinces aren't

doing much so they always question me and I tell them to contact their department to see whether or not they should get people interested in coming and having a look. So I'll leave that with you. I'm not sure what other things, because I don't sit on the association, I'm a member but not on their executive, so that to me is a program I would like to see continue. I think it has a real benefit and I think it's one that other provinces could follow. I don't know how familiar you are with it.

[10:30 a.m.]

MR. D'ENTREMONT: Well, not very, you know, ultimately it's basically a program done within NSAC and I think it shows the value of having that kind of research capacity within this province and I'm very happy to see that you're participating as well. There was a one-day workshop held last month.

MR. MACDONELL: Yes.

MR. D'ENTREMONT: Was there a good turnout?

MR. MACDONELL: Yes, there was actually.

MR. D'ENTREMONT: So this was good to see but, yes, it's something that we could probably bring forward at our table, try to get a little piece on the roundtable piece that we'll probably have in July at our next meeting and at least garnish a little information on them and see how many people are actually doing it and if they're interested in trying to do something like that, we could probably provide some oversight on that as well.

MR. CHAIRMAN: The hour for the NDP caucus is over and we'll turn it over to the Agriculture Critic for the Liberal Party, the honourable member for Annapolis.

[Page 20]

MR. STEPHEN MCNEIL: The birthplace of this great province and country I might add, you should add that, and I want to have on record that the member for Hants East does agree with me when it comes to agriculture on most issues. It's when we go away from agriculture is when he starts straying (Interruption) Different philosophies there. Before I start, I want to thank the minister, the deputy minister and the staff, not only for today, but for the last 12 months on being very co-operative with our caucus and any requests that we have when we come down. So I want to thank you for that very much and have that on record.

Just to go back to AgraPoint, of course, surprise, surprise, right, you mentioned the $2.2 million and there is, for lack of a better word, a retaining fee that the department has of that $2.2 million. How much of that $2.2 million would be considered money that you would use?

MR. D'ENTREMONT: There is no retaining fee on it. The $2.2 million is, of course, for the use of the industry and the things that we would ask them to provide an agrologist's oversight on, would be . . .

MR. MCNEIL: With a specific amount each year out of that $2.2 million you're entitled to ask for?

MR. D'ENTREMONT: No.

MR. MCNEIL: So you theoretically could ask them for $2.2 million worth of service?

MR. D'ENTREMONT: For the use of the industry, yes.

MR. MCNEIL: And theoretically you could ask them for nothing?

MR. D'ENTREMONT: Yes.

MR. MCNEIL: Has it changed much?

MR. D'ENTREMONT: I think it has changed dramatically because I think the way that AgraPoint had been heading, and this is my personal feeling, is that they were very focused on growing the business to be an international consulting company. That wasn't the original intent of that group at all, it was to provide extension services and help to the Nova Scotia industry and that's what I feel the MOU does, is to provide those services to Nova Scotia farmers, to the Nova Scotia industry, but I think that that has changed a fair amount through the drafting and the signing of the MOU.

[Page 21]

MR. MCNEIL: I, like the member for Hants East, was hearing a lot about, you know, the industry was not happy with AgraPoint. You suggested earlier today that you are not getting those letters from the industry anymore since the MOU has been signed. Do you think it's just because the industry has just given up on trying to acquire that service from AgraPoint and saying, listen, there's nothing we can do about this, the government is going to continue this, and we'll move on?

MR. D'ENTREMONT: I don't think so because I think AgriaPoint does a fair amount of surveying their customers and surveying their clients. They have a really good customer satisfaction in the people who do use it. I think there's a lot of people, you know, ultimately if you look at the birth of AgraPoint, why it was created, it was to try to provide services that were shut down by the Production Technology Branch. People don't like change and the change was that there was no longer a PT Branch and now there was AgraPoint and people are still having a bit of a problem with that, that they feel that they really don't want to call for service. They would rather see someone come to their farm and have a chat. I don't really, you know, I don't see a problem with that.

MR. MCNEIL: But that's not the issue that the farmers are saying to me and I would also like to have the list of what services they're going to provide you.

MR. D'ENTEMONT: Sure.

MR. MCNEIL: That's not the issue I was hearing. The issue, depending on what farm they were landing on, would be depending on what service was being provided and how much it was going to cost. You couldn't get a fee structure, you know, and some farmer would get the same thing, would get one service free and another one would be paying for it and the fee would be different. That was the biggest issue that we were hearing and the fee structure still doesn't exist to my knowledge.

MR. D'ENTREMONT: We will have one for you, but the other point is that we have also opened up the board appointments to a broader group. We're looking for nine people, trying to basically start turning over the board of directors as they stand today and we've had tremendous interest by the industry in participating on that board of directors. So, you know, I think there are two things going on really which was the MOU which is the definition of what their services are and I will endeavour to have that list of services and the cost structure that revolves around them, but also there was an issue in regard to board governance and how the board of directors were appointed, what industries they were coming from, and I think that we're going a long ways in setting up that ultimate delivery model to better serve the Nova Scotia farmers.

[Page 22]

MR. MCNEIL: You had mentioned that the Council of Leaders endorsed the MOU. What choice did they have, the status quo or the MOU, and the MOU is better in their mind than the status quo, so what choice did they have? Did they put an option on the table? Did you give them another option?

MR. D'ENTREMONT: No one has ever provided me with an alternate option to AgraPoint. There have been some ideas floating around, some of them drastic and some of them minor, but there has never been a real consultation that said this is the way it should work. There are, like you said, a lot of different views on how it works, how it's supposed to work, what it was supposed to do, what it's not doing today, what it is doing today, and all that stuff that happens behind the scenes, but I think with the structure of that MOU, and I do offer you the same thing that I did offer the member for Hants East, was simply to sit down and look at the MOU and you can ask all the questions on that particular MOU line by line with the people who did draft it. It goes back to some of my first comments when we started out after my statement, was to do a better of job of being on farm, of understanding the needs, and I think that's something that we did lose with Production Technology, but we need to rebuild that and I think AgraPoint will provide that information for us. Our ARCs are very responsible and very out in the industry now. So I think there are a lot of things that really need to be tightened up, but I think we're moving in that direction.

MR. MCNEIL: Great, thank you, and I will take you up on that. You mentioned the $500,000 that was given to the sector; $150,000 of it is going to be spent to set up some kind of a management infrastructure. Why wouldn't that have gone through the federation? You mentioned earlier about Quebec, you would like to move towards the Quebec model. Well, that's one of the strengths of the Quebec industry is that they have one voice for agriculture, you know, one of the good things for the Government of Nova Scotia is that the industry itself is so fragmented they can divide and conquer it and it happened right here last year when we were talking about the BSE crisis. The cattlemen singed on and the federation, and were originally the people who you were talking with, and the next thing you know the cattlemen signed a deal and what can you say, what could anyone say? Why wouldn't that have gone through the federation?

MR. D'ENTREMONT: Well, basically, and let's talk a little bit about that relationship and I think it's always a good topic of conversation. I think the relationship with the federation, this year, last year, has been about the best it has ever been in a very long time and I appreciate the insight and the consultation that they do provide to us, but sometimes we do have to make decisions that go beyond their wishes, whether rightly or wrongly.

In this instance, it was the cattle producers who stepped up. They're the ones who came with the presentation and the proposal for this. In this case, I think that the industry is stronger by having a stronger Cattlemen's Producers Association. I think that's where the money should go. If you look at the $150,000 out of that $500,000, that $150,000 is set up in tool-up and administration costs, in order for us to participate in a national program, which

[Page 23]

is the $2 levy program that's being instituted right across the country. I think it was incumbent upon us to work directly with the cattle producers in order to get this set up.

MR. MCNEIL: But a third of that money is going to be chewed up in administration, right? Obviously Quebec is doing it the way you suggested it should be done. They're doing it through the federation. When the dollars are so precious, why are we reinventing the wheel in terms of creating more administration? This has been one of the biggest complaints that I hear from the agricultural community. Both federal and provincial governments have spent lots of money, but the problem is by the time they get to the farm, the money is gone. Here we are now, out of the $500,000, $150,000 is going to be used up in management.

MR. D'ENTREMONT: What you're saying here is we're not going to have an association that's going to be set up. Without a strong Cattlemen's Association, we're going to flounder for a very long time in having an industry that's not set up.

MR. MCNEIL: I guess where we disagree on it, you can correct me if I'm wrong, I believe a lot of that administration stuff is already going to be duplicated by the federation. I think what you're doing is when you talk about the amount of money that is in the industry and how you're going to distribute it, they're going to be duplicating what the federation already has in place. You could possibly add another staff person at the federation to deal directly with this check-off. The infrastructure is there. But we're going to spend a third of the $500,000 on administration.

MR. D'ENTREMONT: I think there also has to be a point where you have proposals that people want to do certain things with it. We were coming down to the end of a fiscal year, to be quite honest, we had a proposal that made tons of sense from the Cattlemen's Association, we had no proposal from the federation, and the basic idea was, well, you could provide it to us and we'll park it for a while until we figure out what to do with it. I don't think that's responsible enough. I think that the proposal that was submitted to us from the cattle producers was a very good one, and I will, like I said, endeavour to make sure that you have a copy of that to see the things that they will be doing.

I tend to agree with you in that the federation should be the one-stop shop for this. I shouldn't have to deal with all these other groups as well. But they continually come to our department looking for help and insight and all those things. You have to find a balance between working directly with the commodity groups and working through the federation, and I really haven't found that balance yet. Any insight you can provide on how to do that would be very much appreciated.

MR. MCNEIL: The cattlemen have a seat on the federation. Was there any talk of saying to them, there's only so much money, why wouldn't you want to go through the federation? Did they give you a reason why they don't want to go through the federation?

[Page 24]

MR. D'ENTREMONT: That discussion never really came up. Ultimately we were focused on trying to provide that money in an efficient manner for projects that would benefit that industry. That's why it flowed in the way that it did.

MR. MCNEIL: I guess for me this goes back to what the member for Hants East mentioned, in terms of a vision, right? If we believe that - and I somewhat agree with you when you say Quebec may have it right - the way they have set up their infrastructure is right, why when someone comes to us do we not have a plan in place now to try to put that infrastructure in place? Wouldn't that have been one of the first things, if we believe that that's correct and the federation should be the one-shop umbrella, why wouldn't we have tried to say, listen, can't we do this under the federation? Why can't the two groups come together and make this happen?

[10:45 a.m.]

MR. D'ENTREMONT: Over the last year and a half it's been difficult, at times, to work in that respect, because we have been so focused on providing funding to farmers, and I think we've taken some really good advice from the group. And when I'm talking about Quebec, I'm not necessarily talking about how that structure works between government and industry, I'm really saying how products get onto shelves of stores and those types of things. I think they have it right when it comes to buy local. I'm not saying, necessarily, that they have it right in the way that the structure is set in that respect.

But, that said, I would find it so much easier to talk to one person than it would be to talk to a whole bunch of other groups. If you don't mind, I will call on you to help me out with that one a little bit. It will be to sit down with the federation and try to give them some clear direction as well, because they've got a lot of things going on at the same time.

MR. MCNEIL: And I would be willing to accept that invitation and do what I can to help. I would like to add to the record that you were not handed a department that was in great shape, quite frankly. Your predecessor knocked down every goodwill wall that was ever up, between the industry and the department, quite frankly. To your credit, I think you have mended a lot of that and are moving in the right direction. I guess I have a view of the industry that I believe there needs to be one strong voice representing all the commodities, and they can be under one umbrella. I believe that to grow the industry properly, that needs to happen. That's my own view on that. We were talking about the retail sector, have you sat down with them yet or are you in the process of sitting down with them?

MR. D'ENTREMONT: My marketing department, my department sits down with the grocers' association about four times a year. I, myself, have only had the opportunity to sit down with the grocers' association, I think, once or twice. I think the association does a good job in representing its members. Unfortunately, what I feel is that the issues tend to keep piling up. They're not necessarily getting better for farmers. They might be getting

[Page 25]

better for retailers, I don't know. So it's not the direction I think that I want to bring this issue, which is why I've asked to have a real sit down meeting with the grocers, with the groups, sit down eye to eye to talk about local procurement. I think the member for Hants East was quite correct in saying that we need access, but we also have to have access at a fair price. It's going to take some goodwill and some long discussions on how to make that happen.

MR. MCNEIL: I share some of his comments. One of them was I don't believe, and maybe I misunderstood it in terms around quality, our product is a quality product. No one can deny us the market because of quality. But let's be honest, quite frankly, about it, I've said it in the House and I'll say it here, there is a monopoly in the retail sector in Atlantic Canada. It comes down to bottom line, and it's product wherever they can buy it the cheapest.

MR. D'ENTREMONT: I think it was you or someone else who said that when the banks were trying to merge, everybody was all up in an uproar. Nobody has really said a word about the amalgamation of the retail chains. I think it's time to take that issue on. It's one that we have discussed around the federal-provincial meetings, and it's something that I want to pursue and am going to pursue here in Nova Scotia.

MR. MCNEIL: One of the challenges I see around that is if it's left to goodwill, and I think maybe that is the first step to go, I'm just wondering how far your department is prepared to go to make the market accessible to Nova Scotia producers?

MR. D'ENTREMONT: I think, and I've said this in the past, that if it's going to require legislation in the end, then it will require legislation in the end. It's just how to comfortably do that - of course it will be in contravention of interprovincial trade agreements and all that other stuff. So I think we really need to go down the diplomatic way, and should that happen, you get the big stick out.

MR. MCNEIL: I'm glad they're sending you to be the diplomat, and that's a compliment, by the way. You mentioned about the P.E.I. plant and the fact, as you're well aware, it deals with under 30 months, in order to protect the integrity of that plant, nothing over 30 months will be there. That is becoming a huge problem with the backlog of cull animals in Nova Scotia and indeed in all of Atlantic Canada. I'm wondering if your department has entered into any discussion with New Brunswick and P.E.I. to bring in a cull plant, a cull line in either Nova Scotia or New Brunswick?

MR. D'ENTREMONT: There has been no discussion interprovincially. I know there is one proposal that we're looking at seriously, that we're studying at this point. I was kind of hoping that there would be a few companies that would be interested in doing cull, because I think there is a fair market for industrial beef and for grind, and I thought there would be more people interested in it. There has been the funding that we did provide to

[Page 26]

Bowlby's down in the Valley, a few hundred thousand dollars, in trying to expand their capacity there, and their market is using some cull animals and some other animals. I was kind of hoping that some of our local abattoirs would step up and make requests on expanding their capacities as well, yet that didn't really pan out as well as I thought because there was some funding set aside over at the Office of Economic Development to make that happen.

So what we're really trying to do now, the one project that I really can't discuss at this point is looking very good and I'm hoping to have something in the very near future. This plant would be able to take the culls in the province, it would be able to have federal inspection for the benefit of all producers, dairy and cattle. We're also trying to get funding out of the APF agreement, where there's a target for capacity initiatives, and try to use that funding to entice people to set up cull. There has to be the market for it, and I believe there is market for it. They just have to have that guarantee of supply. I know once the first batch of culls is gone, and there's about two years' worth of cull sitting around right now, which is seven times two, there's 14,000 animals of older age now that probably need to be worked on, but once that group is gone, we have to make sure there's that guarantee of supply.

MR. MCNEIL: I'm one of those people who believes this issue needs to be looked at beyond Nova Scotia, in terms of an Atlantic issue. There must have been a Liberal Premier at the table when they talked about that Atlantic initiative, there had to have been. This has been ongoing for a while. Anyway, I believe that when you look at, for example, the packing plants in this country, there's none here. When you look at our industry, we're relying on so many outside forces that unless we start to have some kind of a vision to move forward, not only as a province but as a region, we're going to be left behind.

You look at the amount of money, federally, that's been spent and provincially, and you look at how much has been dumped into those packing plants out West that never got to a producer, and our guys are sitting here starving, we've just given them $9 million, you just gave them $9 million. To think the border is going to open, that will open when the Americans decide it's going to open. So what are going to do next? We've been almost two years just giving money, and actually have no plan in place to deal with, other than to write another cheque. These guys still have inventories which are busting. What are we going to do to deal with that issue? I'm throwing out the idea of an Atlantic approach, I'm throwing out the idea that maybe we need a cull line, maybe we need a packing plant in Atlantic Canada. Has nobody talked about this?

MR. D'ENTREMONT: Well, like I said, recently we have not had that discussion. What had happened was while they were still constructing the P.E.I. plant, I think the three ministers, David Alward, Kevin MacAdam and I, had felt that it would be in our interest to provide funding either through ourselves or through the federal government to provide a cull line directly out of that P.E.I. plant. But all of a sudden that discussion sort of ended when we really found out the co-op didn't want to do that. They don't want to be running culls

[Page 27]

through that same plant. It would really mean that we would have to set up, or find somebody interested in running a cull plant, separate, stand-alone from that one in P.E.I.

There has been some movement in New Brunswick, and I forget the name of the company, somewhere near Fredericton that's going to be taking some cull through there. I think that what we decided is that we would try to find some smaller options in each of our territories but knowing that that guarantee of supply would come from either one of the provinces in order to get into those plants. The discussion seemed to be going really well there for a while until that ended in P.E.I. The ball has been dropped and it hasn't been picked up.

MR. MCNEIL: Part of that issue around the P.E.I. plant is, of course, the export. They need to protect the integrity of that plant. And that just makes sense from their perspective. Just to change gears a little bit, but not quite, the Premier mentioned supplying the institutions with beef. Where are we at on that?

MR. D'ENTREMONT: Basically we still require - well, number one, the jails and those institutions now all use, exclusively, Nova Scotia product, which I'm happy to say. Of course, the bigger issue was to find a way to get our product into hospitals and those types of things. There are discussions right now between the suppliers, which of course is Cisco and the buying group here in the city, the Capital Buying Group or whatever it's called, to buy those products. As far as we understand right now, as P.E.I. has gone on-line, and really what we have to do is change a little bit in the respect that we are really trying to say that Nova Scotia beef was going to Nova Scotia institutions, but I think we really have to open up a little bit because you can't necessarily do that, and have Maritime animals or Maritime beef going into Maritime institutions.

There are discussions right now between Cisco and those groups, and Co-op Atlantic, to buy their product and have it enter institutions. Hopefully I'll have a good news story in the next few weeks on how those negotiations have been going.

MR. MCNEIL: There was also the Brand Nova Scotia Program, the Buy Nova Scotia First plan, that was including more than beef. That plan, where is that at?

MR. D'ENTREMONT: What happened there, and as we looked at all products that government provides and all services that government provides, whether it would be tourism initiatives, whether it be other initiatives, end products, I think we realized that we really didn't have much of a structure at all to hang a hat on, which is why economic development went off and did their work on Brand Nova Scotia to have the global brand. We can access stuff after that. The group has been working, within my marketing group, in liaison with this brand group now to have that Brand Nova Scotia. So we sort of got pre-empted over the last few months, probably the last eight months now, we've been pre-empted as the main brand piece was put in place.

[Page 28]

But in the meantime we're still working quite efficiently and quite happily with Taste Nova Scotia for our premier products to have the Taste Nova Scotia logo, to be part of that marketing group. We'll still continue to provide funding and then some to Taste Nova Scotia and encourage all producers that have a product to get into that program, because it really defines what a Nova Scotia product is.

MR. MCNEIL: You had mentioned, earlier in your opening remarks, around the $235,000 for the Orchard Renewal Program. Is that ongoing, year after year, or just a one-time payment?

MR. D'ENTREMONT: That is a five-year program. There is a grant program that will be providing a per tree payment to producers. I forget the total. Basically what has happened over the last few years is that the Fruit Growers Association has been working on their industry development program, their strategy of what they want to do, and of course there was a number of pieces, one was a buyer resource piece where they were looking at the falls and the not-so-good apples and trying to find other products that they could do with that, including pharmaceuticals. That marketing initiative that you saw on the billboards all around metro and all across the province, the Annapolis Valley original, and the last piece

to that - and there were a couple of other initiatives in there, I just don't have them with me right now - but the other part was that they really wanted to have some kind of orchard renewal program, where they could entice their producers to pull up the non-productive varieties to get a better yield per acre. If you look at a yield per acre of McIntosh versus Gala or versus a Honeycrisp, and you look at the actual price that you can get on a Gala versus a McIntosh, I think it makes immense sense to start redoing our acreage and hopefully increasing the acreage of apple production in the province. This program is designed to do exactly that.

[11:00 a.m.]

MR. MCNEIL: And I know it's one that the industry has been wholeheartedly supporting, so congratulations. Around the farm investment fund, I brought to your attention an issue . . .

MR. D'ENTREMONT: Lime.

MR. MCNEIL: Lime was the one at the time, but it's other issues. Because of the way the budget was introduced and because of the fact that you need to have sent your application in prior to purchasing your product, there's a gap there. Some people apply their lime in the Spring. I know that not only my constituents but other constituents around Nova Scotia have been caught off guard by this, even though they knew, and I recognize that. I'm wanting to know, what is your department doing to address that little pitfall?

[Page 29]

MR. D'ENTREMONT: Especially with lime, we've already made the change that it will be providing the receipt. So if you had to buy it in March, get the order in March in order to apply it on the field in April, we'll be accepting those funding requests. It's a bit of a change for us, but I think we can roll with the punches.

MR. MCNEIL: Dare I ask whether that's retroactive?

MR. D'ENTREMONT: No.

MR. MCNEIL: I just thought I would try.

MR. D'ENTREMONT: Thanks.

MR. MCNEIL: To the Estimates Books, if we could, just for a second, on Page 1.10 under Tangible Capital Assets, yours has jumped to $675,000. What is that about?

MR. D'ENTREMONT: The transfer of the loan amortization system of the Farm Loan Board. So the loan accounting system that they had there. They had to actually buy a new program - the farm and fish loan boards in order to get into SAP, I believe is the reasoning. So it would take a fair amount of cash to update that software system.

MR. MCNEIL: I also noticed that your staff is going up, the estimate for last year was $513,000, and I guess your actual was $506,000, and you're going to $519,000. I'm wondering what the new people will be doing.

MR. D'ENTREMONT: Quickly, the implementation of a restoration initiative brings forward two additional FTEs, which is one biologist, one marketing specialist, to assist community groups in restoration projects. The TechnoVenture Centre that I referred to in my speech at AgriTECH Park is two additional FTEs, which is one scientist, one assistant. The other piece refers to increases in resource requirements at NSAC, electrician, computer services officers, a poultry research chair, and then there was a couple of offsets on the deletion of some professors and some casual positions. Those are the ones that are real warm bodies, some of the other ones are of course casual positions that we do have in place and secretarial pieces and things like that.

MR. MCNEIL: On Page 3.2, Senior Management, it's gone from $840,000 to $994,000. What accounts for that increase, it's about $150,000?

MR. D'ENTREMONT: That was to move all the communications staff into that budget. There were two communications people that we have to pay for out of that senior management budget.

[Page 30]

MR. MCNEIL: Was there anybody who you access or you use that is not directly tied into your budget? Where were these people before?

MR. D'ENTREMONT: Of course they worked for Communications Nova Scotia, but they were being paid for by our Policy Section. So we just basically moved those people over into our budget.

MR. MCNEIL: On that same page, around the Agricultural Services, and I know the member for Hants East asked as well, but last year in the Agricultural Services you were over budget by $9 million. This year you've fallen back to your estimate of last year. What makes you so optimistic? Is that just all the money they were willing to give you, and you said we'll plug it in there and have to fight for the rest at the Cabinet Table when I need it? That's not how it works, is it?

MR. D'ENTREMONT: Well, you never know. Basically what it boils down to is that the optimism of farmers has fallen upon me. I think that we as a department have to be optimistic in feeling that the industry will do better this year and will do better next year, and will continue to do so. I think there is enough funding in there. The other thing is that we've also changed, with the agreement with the federal government, how some of the programs work, of course the CASE Program. One of the biggest problems that we had is that we were unable to get funding through CASE into farmers' hands, if you remember that discussion.

What we've done over the last bit is to change some of the regulations, and refer to it, the deposit requirements and those types of things, so we feel that the funding will flow through CASE rather than having to come up with ad hoc programs.

MR. MCNEIL: The Agricultural College, there was some suggestion they were going to be changing the name and removing agriculture from the name. Is that still out there?

MR. D'ENTREMONT: I think that issue has been nipped in the bud for a bit. Basically the Agricultural College, in its structure, was originally set up 100 years ago, 1905, and there were government entities, such as the Normal College in Truro, the Nova Scotia College of Art and Design, and a couple of those entities. All those entities have either moved off or actually disappeared, in the case of the Normal College. So we're looking at better structure for NSAC, so it can be a true institution, a true research institution in the sense of a university. There are certain freedoms they do not have, whether it be academically, as a stand-alone institution like a university would versus being a line department.

So we're looking at a model for them. There is a document that they produced, which was a vision for the future, I forget the exact name of it, that we've been considering over the last bit. It might have been the president's greeness, not knowing the industry in Nova Scotia, and his feeling on what's holding that institution back. We've had declining enrolment there

[Page 31]

for a number of years, and we're looking at ways of making the college sexier. I think it was his feeling that if you got rid of agriculture, we'd have more people accessing the bio-type programs that are there, the chemistry and science programs that are there. Yet, you know what the out-fall of that suggestion was.

MR. MCNEIL: It would almost be like taking Cape out of Cape Breton University. (Interruptions)

MR. D'ENTREMONT: Anyway, I think there's going to be a fair amount of discussion between NSAC and government over the next bit, involving the community as well, on what its governance model should be. I will continue to stand by my decision to leave agriculture in that name in some way or another.

MR. MCNEIL: I'm glad to hear that. I also want to put on record how important the Nappan experimental farm is to this province. I'm just curious about what you are presently doing to maintain that.

MR. D'ENTREMONT: Right now, to start the conversation, we were completely set back by that decision to close Nappan. To us it seems a bit contradictory on trying to grow an industry in Nova Scotia and the Atlantic Provinces and beef, and at the same time closing your only beef research station in the Maritimes. We found that to be quite discouraging. We have had a number of conversations over the last bit with the federal minister, with the ADM at AAFC. We will continue to stay close to the issue, but ultimately we want the federal government to continue its investment in Nappan, because it is our feeling that you can't close it and have that kind of research happening in the Maritimes. I think that some of the original ideas were to move the scientists off to NSAC, yet we cannot house the animals or actually have the actual field infrastructure, the fields and all that, to do the forage part of that experimental research.

So we would still have to find a way to maintain the Nappan. I think we're staying really close to it. Our first blush is the federal government will continue to pay for it. That might be dreaming in Technicolor, but we'll continue on that for a little bit, knowing full well that we're going to have to keep very close to it.

MR. MCNEIL: Well, I'll offer my support, whatever I can do to help make that happen. Now I want to yield the rest of time to my colleague, the member for Kings West.

MR. CHAIRMAN: The honourable member for Kings West.

MR. LEO GLAVINE: Mr. Chairman, I'm not sure if I'll be as tough on the minister as my colleague, especially since there are a few crumbs for the apple industry this year. In reality, to see some money for orchard renewal is a very positive measure. In my riding, there are, indeed, a significant number of apple growers and certainly in conjunction with the work

[Page 32]

that Scotia Gold has implemented, I feel that this is a positive signal to some of those farmers who are wondering about what direction and so on they would personally be going. So I think this is certainly some good news that they needed to receive.

However, I will start off with the hog industry which again, in my riding, has a significant number of producers. One of the ongoing question areas that has come up for me is in dealing with the loans that they have received which, as we all know, have been a lifeline for the hog producers but certainly strapped them to a great extent even in good times and right now, of course, the prices are reasonable. However, they have a first loan and a second loan and I'm just wondering if the department has moved to try to consolidate or support the loans. What have you actually done in the last number of months in that area?

MR. D'ENTREMONT: This, of course, is an ongoing discussion that we have with Pork Nova Scotia. Recently they have asked to hold one loan off while they are trying to pay for the other one. The optimistic part right now is that the hogs are actually at a fairly good price and there is actually payback of those loans right now. We have found, trying to find a way to amalgamate those things and try to make it an easier payback for those producers but the thing that we are really trying to do here, not unlike what we are trying to do with the cattle producers as well, is try to provide them with some strategic direction on what the industry should look like, what they want to be in five years, what they want to be in 10 years and then try to provide them the tools in order to have that happen.

There is a strategic planning initiative ongoing as we speak and of course one of them that they talk about quite often is to have a ledger program. The ledger program basically works like a loan. It would be a fund that would be held by Pork Nova Scotia and then they would pay out the difference, depending on the hog price of the week. I think there is some good validity in what they are asking there and it gives them stability in the hog prices.

The hog industry in Nova Scotia is a creation of governments, really, if you look at how it came about. There were lots of grants 40 years or 50 years ago and how they were set up and they survived by grain subsidies and those types of things. Now that a lot of that stuff is gone, they are really finding the crunch but I think with the new strategy, we will provide them with how many hogs we should be producing, how many farms there really should be, and then we can start looking at upgrading their farms because I think right now if you look at what they are producing their animals in, they are probably substandard, they are spending a lot of money on the upkeep of buildings that really don't work anymore so I think there is a lot of work to be done, yet I am very thankful that I have a really good group.

The Pork Nova Scotia group is phenomenal to work with. Its President, Herman Berfelo, is an absolute gentleman. His Executive Director, Henry Vissers, a very smart man and one who we have a lot of time for. I think in the end that we will have a really good strategy and I'm thinking in that strategy will be growth for the future but will also provide an avenue for getting out of the business. There are some people who have tremendous

[Page 33]

investments in their businesses and who might be looking for a bit of help to get out. I think there are a lot of things that we are doing and I'm very hopeful that we will have that in a very near term as well.

MR. GLAVINE: That certainly gives a little bit of an overview, touches upon a couple of the other smaller points and so on that I was going to be making because when you talk about working on a strategic plan for the pork industry, I see that as a really necessary piece. We've had that roller coaster ride, not just through the past two years since you've been minister but, in fact for some time out there. Again, this year I think the statistic will show that a few more farmers have actually dropped out and the production is now below the level that the Larsen Packers in Berwick would like to see coming into their plant from local production. In fact, it is fortunate they are actually tied in to Prince Edward Island and to be able to get carcass product from elsewhere.

Do you think, at the current time, the pieces you are talking about, a strategic plan, the ledger program and so on, is going to give that kind of impetus to keep the farmers that are there in production and in fact allow them to maybe pick up some of the differential that exists in what Larsen's would like to be receiving on a weekly basis?

MR. D'ENTREMONT: Absolutely. The industry in Nova Scotia, you know, to make Larsen's happy needs a production of about 200,000 animals per year. We've dipped to about 192,000 animals so we need to find a way to pick up that extra production. I think if you talk to farmers, you talk to Pork Nova Scotia, I think they are very interested in trying to find ways to pick up that production. They have been very good up to now because our production number has stayed pretty constant at 200,000 and we've lost a number of farms over the last five years yet we've been able to maintain that production number. So we are sort of getting to a point where I'm hoping to have that strategic plan there and then we can provide further investments in order for those guys to be able to expand their production to pick up that number so that we can keep Larsen's in this province.

MR. GLAVINE: One of the little areas, and I'm not sure if your department has investigated this, is another area that challenges the farmers when they could be facing even small, additional costs for feed. As you know, the closure of the mill in Port Williams is going to mean that Moncton becomes a better hub and source and a requirement to deliver feed to Valley Farms. I'm just wondering if you've done a little bit of homework on that, Mr. Minister, and if in fact it will have a negative impact or do you see it all balancing out to try to keep feed costs at a reasonable rate?

MR. D'ENTREMONT: Feed costs are something that are very difficult to address. The only real thing that we've done in regard to feed costs is as we try to calculate the $145 trigger for the pork loan that we are going to let that float in reference to feed costs because they definitely found a crunch in the last bit where they were spending a lot more and really

[Page 34]

their cost of production went well beyond that $145 so we are trying to make that adjustment there.

But feed costs were so dependent on bringing that grain by rail from the West that it's very difficult to find ways to keep that cost down. There has to be a way to use up some of the lands that we do have in this province that are underutilized, whether it be in Annapolis County and places like that to provide grain. I know I really haven't found that yet and I wish we would and I wish somebody would step forward with a proposal for us because grain is such an important factor when it comes to feeding our animals, yet that industry is one that I haven't been able to make much sense of yet because you talk to a lot of producers and you just sort of talk, well why don't you grow your own grain or why don't you buy from this guy or not that guy. It's a very personal preference on who you buy from, when you buy it and things like that. It's definitely a challenge and I think it will be a challenge for a long time to come.

MR. GLAVINE: That being said, one of the areas that there hasn't been much talk about in terms of being raised here in the Legislature or maybe even too widely in the industry but yet when I talked to a few of the processing industries throughout the Valley, and I know we have the significant number for the province in terms of a wide range of agricultural production, and several of the owners, plant managers and so on, talk about the need for joining with the Department of Education and having a better trained and overall higher quality of worker coming into the industry. You can no longer leave Grade 8 or Grade 9 and pop into the production line. There's a lot more electronic monitoring and data equipment and so forth. I was just wondering if your department has looked at all in conjunction with the Department of Education about any kinds of initiatives or anything that you would even like to see investigated along those lines because I'm certainly getting a greater sense now than certainly what existed even 10 years ago. I'm speaking here more as an educator who was involved with co-op programs with local industry. I just wondered if there is anything in that area that perhaps you are starting to take a look at.

MR. D'ENTREMONT: I'm just trying to go through the books that we do have but I know that we do have a skills committee that works with the Department of Education and I think that's pretty recent that we've put that piece together. As we get into the world of higher quality, high food safety and those requirements, I think it is imperative that we find a way to train some of these folks who are moving into that system. It's not unlike what we've done with the boat-building industry where we finally have a course through the NSCC which is a real co-op program that the training actually happens in boat shops. I think something like that, there's a good model to try to find for the agriculture industry or for the processing industry. If you look at how they do stuff, you walk through Larsen's, it's a pretty vast area. Sure, there are a lot of knives and those type of things but there is an awful lot of machinery in there too that requires a fair amount of expertise to run. Also under the renewal pillar of the APF it talks about creating business skills that I think that industry can grab onto as well in order to provide training opportunities for their workers. I think there is really a

[Page 35]

kind of tripartite group that we can put together which would be industry, the Department of Education and our department to try to pull that forward but we will see if we can find some more information on that as we go forward.

[11:15 a.m.]

MR. GLAVINE: I would appreciate that, Mr. Minister, thank you very much. Just, again, then a final perhaps reiteration. I know the member for Hants East talked about a vision piece for the agricultural industry. I still think that our industry has some big problems, some huge challenges but when I take a look at the quality of soils and the tradition and so on in our province it is one that certainly our Party, and I certainly see some areas in which your government, is very committed to. So I just wondered about a little bit of reiterating, specifically for the hog industry, even though it is one that has been built on government grants, incentives, subsidies, et cetera. I'm just wondering where you see that because I do hear from people that always want that little bit more of assurance should we continue to have some difficult times.

MR. D'ENTREMONT: Specific to pork, to hog, I think our cost of production is a little off because of grain but the efficiency that we've been able to pull out of our establishments is tremendous and I think that is completely science-based and research-based as well if you look at pigs per sow and those types of things. I think a lot of that comes down from the research and those types of things that have been happening at NSAC and the collaboration that we do have with our research community here in Nova Scotia. I think from a vision standpoint that we really need to help foster that kind of science in Nova Scotia and it's one that we will continue to invest in at NSAC.

MR. GLAVINE: Moving on to the beef industry, I know my colleague has asked you several questions about that this morning. I'm still wondering, however, where you see the province going, where you see the farmers, the processing industry going in terms of trying to resolve some of the dilemma that has been placed upon us here because of BSE and how we are going to be working our way out of it as opposed to looking to national solutions, whether it be a CASE program, the border being open. What are a couple of the pieces that you see here because I know, again, in the Valley area, there are a couple of major processing plants. They are provincially inspected. I'm wondering if you see the move to a federally inspected plant as one of the pieces that can help the industry here in Nova Scotia. I know that, as you said, you can get rid of the cull cows in a couple of years and then where do we go from there?

I sense the will on the farmers' side to want to move in that direction. They know they can't put out big numbers to their herds immediately but when you consider that we produce about 20 per cent of our beef, raising that level higher certainly, I think, is a goal that they do have. So where do you see your department fitting in to make some things happen for a Nova Scotia solution to the ongoing challenges that the beef industry will have?

[Page 36]

MR. CHAIRMAN: This will be the last question and answer for the Liberal caucus.

MR. D'ENTREMONT: Mr. Chairman, they basically live with it and to get your numbers, we produce right now in the province about 7 per cent of our total consumption so we have tremendous growth and tremendous opportunity here. What we've been trying to do is work collaboratively with the Office of Economic Development to provide the kind of funding that is required to upgrade from a provincial inspection to a federal inspection which is tremendous.

The problem that we've been trying to overcome, and this is in discussion with CFIA and Agriculture and Agri-Food Canada, is try to get the guidelines on what a federally-inspected plant is a little more tightened up. The unfortunate part is, as you are trying to upgrade or trying to get a build new facility, the critical path at this point is do your design, tell me what you want to do, you give it to us to give to CFIA and they'll look at it and say, no, that's not good enough, could you do this, this and this. There is a lot of red tape, there is a lot of stuff that is just not required in our estimation and we're trying to tighten it up.

[11:30 a.m.]

I forget what the total number was for the company in your riding to upgrade from a provincial inspection to federal but it was at least couple of million, which didn't make a whole lot of sense because we find our guidelines are just as good as CFIA, there are a few things that are different but, all in all, I think we're very comfortable in the safety of our meat supply. I think we will continue that discussion with them but I think ultimately to work collaboratively with the Office of Economic Development to make sure that they consider agriculture as they provide loans and grants to industry I think will work very well into the future. Again, we haven't been inundated with all kinds of requests to make those kinds of expansions. I'm hoping that we will soon, because we do need that extra capacity here in the province.

MR. GLAVINE: Could I ask for one number clarification?

MR. CHAIRMAN: Yes, very quickly.

MR. GLAVINE: Did you say 7 per cent, Mr. Minister? You did. Okay, thank you.

MR. CHAIRMAN: Thank you very much. The time for the Liberal caucus has elapsed.

The honourable member for Pictou West.

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MR. CHARLES PARKER: Thank you, Mr. Chairman, and good morning, Mr. Minister and welcome to you and your staff. I'm going to switch focus here, I guess, to our fishery in Nova Scotia. You've been dealing with a number of agricultural issues over the last period of time but our fishery is also a very important component of our rural and coastal economy as you know and I think in your opening statement you referred to the importance of the fishery as having a landed value of $801 million and somewhere in the vicinity of a $1.4 billion export industry.

So it's huge. It's a very, very large industry. It's vital to the economy of this province and many, many Nova Scotians are employed in the industry. I guess maybe I got an indication of how big the industry really is worldwide when I had the opportunity to attend the Boston seafood show last month, it certainly was an eye-opener for me to see how major an industry it is across our world and Nova Scotia plays an important part in that. Although we're a small player in the international picture, it's still very, very important to us here in this province.

I guess what I'm getting around to here, Mr. Minister, is it is a very vital, important industry in our province, as is the agricultural industry and as you know, your department now has responsibility for both industries here in the province and that was not always the case. A few years ago the two were amalgamated into one and I've heard from fishing families and certainly also from the farming community that that maybe has not been a popular move and that many would like to have their own separate department. I realize that decision was made before you became minister but can you give us any indication of just how that merger or amalgamation is working and do you feel that maybe in time the right thing to do would be to go back to separate departments?

MR. D'ENTREMONT: I think that this has proved out to be a very good move on behalf of Nova Scotians, because basically what you have is that you still have your farm group, you still have your fisheries group but you also have an amalgamation of the marketing and industry development group, which sort of had two things going on at the same time, which really boiled down to food marketing, food development and those types of things. The food safety piece makes tremendous sense to have it all under one roof in our group where you have licensing, fish plant licensing, those food regulations, all fitting under one roof. So we basically become the food department of Nova Scotia and I think it makes very good sense to continue to have those groups together under one roof.

MR. PARKER: Have you heard from members from either sector who have not been happy with the merger who again would like to see a separate Department of Agriculture and a separate Department of Fisheries?

MR. D'ENTREMONT: As in any change, there are folks who feel that we should go back to the old way. If you look at how they're being dealt with by the department, nothing really has changed. The only thing that really has changed is they've sort of got a deputy

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minister and a minister who have to share up their time a little bit. But ultimately, in order to be the same as across Canada, in order to sit down and discuss things, this is how other departments are structured now, right across Canada, except for Newfoundland and Labrador. So we all sit around the same table, have the same discussions, whether it be talking about agriculture one day and talking about fisheries another, because a lot of these things do revolve around food safety and consumer items and business risk management which continue to be the topics of discussion.

MR. PARKER: The landed value of the catch in the fishery in Nova Scotia, we're the largest province in the country, as you know, for the fishery, both in export value, I believe, and in landed value. In some ways, because we are the largest, it seems logical that maybe we should have a separate Department of Fisheries. I certainly have heard that from some fishing communities out there or some interests in the industry that they feel, maybe, that since we're the largest in the country, we should have a separate Department of Fisheries. I'm sure the agricultural community in some respects may be saying the same thing. Anyway, I just bring that point to you just for comment. But, generally, you feel that both departments are working as well as they can under one roof?

MR. D'ENTREMONT: Yes, they're working very well together under one roof. I think in the end it is to the benefit of all Nova Scotians in order to have it that way.

MR. PARKER: Just looking through the estimates and I see for the Department of Agriculture and Fisheries your budget this year is, I believe, just over $44 million, but last year the forecast for the department was $49 million-plus, so it is about a $5 million drop, if that amount was expended last year, according to the forecast. Are you going backwards? Is it less money than what was spent last year?

MR. D'ENTREMONT: Okay, I have to put my accountant hat on, and I don't profess to be an accountant but there you go. In the estimate of the forecast last year, you see, the $40 million versus $49 million, of course included in that $40 million or that $49 million was the $8.9 million that was provided to the red meat sector, so you see an increase of the $8.9 million. But basically what you need to refer to is estimate to estimate, which is the 2004 estimate of $40.796 million versus the $44.113 million. So we have an increase of about $3.3 million in the department. So we've actually had the first increase in the department in about 10 years.

MR. PARKER: No, I understand that, comparing the estimate to estimate, but most likely then, this year, your department will spend less money than last year?

MR. D'ENTREMONT: Because we don't have that ad hoc program for beef producers.

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MR. PARKER: Right, okay. I want to turn then, Mr. Minister, to some challenges, I guess, that the industry is facing, especially around our inshore fishery. The goal of your department and of all of us is to see a strong and independent fishery and see our communities remain healthy and viable. Certainly, if we have strong fishing families, we have strong communities, that just makes sense. But there are a number of challenges that I want to ask you about and what your department perhaps is doing or anticipating doing about these.

The first one I want to bring up is around access for capital for new entrants into the industry. As you know, the average age of fishermen is increasing, it is getting older, as it is in the farming community also, but with the cost of gear and boats and equipment, it's becoming very, very expensive for young people, men or women, who want to enter the industry and get a start in the fishing industry. When you're looking at a capital investment of $0.5 million or $1 million or more in some cases, depending on which area of the province you're talking about, it gets tough to find the capital to get into the industry and when they go to the bank and they say, yes, we'll lend you the money to buy a boat or we'll lend you some money for gear but no, we can't help you with the cost of the licence, that in itself is the major part of the investment they're making. So it makes it pretty tough when they're turned down by financial institutions.

One avenue that has been suggested as maybe a solution to that problem is through the Nova Scotia Fisheries Loan Board. I know you do lend money for boats and gear, but not at this time on licences. I guess what I want to ask you first of all is, is it possible that through the Nova Scotia Fisheries Loan Board that you might look at a policy of lending money, not only for tangibles but also for licences?

MR. D'ENTREMONT: It's great that we get to have this follow-up of the question that you asked me on Wednesday. Basically what it boils down to is that the licence has increased from about $25 to $700,000-some odd in about 20 years or 25 years. So it has gone through a phenomenal increase, especially a lobster licence in South West, that's the one I'm referring to as the huge jump. This has been a discussion that the Fisheries Loan Board has been having with the Department of Fisheries and Oceans for a very long time.

We had made a decision quite some time ago that we would really like to be able to mortgage or lend money on the licence, because of its huge cost. When it was $25, you spent $100,000 for a boat and $25 for your licence, and away you went. Now, of course, the licence is more than what you're paying for the boat.

We have been having that discussion, like I said, for a very long time. The problem we run into, and whether it is a legal or legislative issue, is that the licence is owned by the Government of Canada. It is a licence that is issued by the Department of Fisheries and Oceans, and therefore they can take it away at a moment's notice. If you do something illegal, if you do something wrong, the Government of Canada can withdraw that licence.

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So, for us, it makes it difficult to mortgage something that is not owned by the person that you're loaning the money to. So we have to look at other avenues. The other avenues that we are looking at are, of course, the capital gains piece that you mentioned in your question on Wednesday, to do the same thing that farmers have. If they're doing an integrated generational transfer of property or of their farm, there is a $500,000 - I think $500,000 is the limit on that one - of transfer, so that brings your tax owing to a lot less.

Really, what's happening, is that you need to have so much more for your boat and your licence in order to go into retirement. That's what's really happening there, in order to get those funds, because you're paying so much on tax. So that, because our tax systems are closely hooked up with CCRA, we have to have agreement on both sides in order to make that change, but that is the discussion that we've been having for a bit now. We look forward to having a resolution on that one. I think that would be good.

That would bring the price of the licences down a little bit, we feel, in the long run. But it's an interesting problem. It's a very difficult one. I think had we not had to run down the line of buying out licences, whether it was retired people from the industry or buying people out in order to take those licences and pass them over because of the Marshall decision, I think the prices of those licences would have remained somewhat at a regular rate. Unfortunately, they're at where they're at.

MR. PARKER: I guess the real problem is getting access to capital, especially for the licence portion of what they're buying. Old or retiring fishermen want to get out of the business, but they're being hit with a high tax burden - and I'm going to come to that in a few minutes - and the young fishermen, male or female, son or daughter, whatever, who wants to get into the business, they just can't afford it because they can't get a loan for that amount.

Now in the Province of Quebec, I understand, they have found a way around this, where they're actually lending money on the licences or the quota, whatever it may be called, and I understand they'll end up with 70 per cent of the licence market value. That is allowing the new entrants into their fishing industry in that province, in the Gaspe or anywhere on the Atlantic Shore, to find a way to get into the business, because then they can get access to capital. That's the crux of it.

So I guess we have an example of another province that is doing something to help their young entrants into the industry - 70 per cent of the value of the licence they can borrow against. Is that something that your department would consider?

[11:45 a.m.]

MR. D'ENTREMONT: Like I said, it's something we've been considering for a long time, unfortunately, insofar as an inter-generational transfer, because our tax systems are hooked up with the feds, we've got some discussions to have. Quebec, fortunately for them,

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their tax systems are not hooked up with CCRA. In regard to the mortgaging of the licence, I don't think Quebec does that, but I could be wrong. I'll check that piece out. Thank you for that piece of information.

MR. PARKER: I understand they do, and the tax implication, that's another problem, but this is lending money to the new entrants to get started in the industry. They're lending up to 70 per cent on the value of the licence. Then you're also lending, of course, on the boats and the gear and just finding a way to help their fishing families remain within their communities. Perhaps you could check that out and find out what the province there is doing. It sounds to me like a good program. I think it could help our fishing industry here.

I was going to ask about the Nova Scotia Fisheries Loan Board, as being the primary vehicle that could help our new entrants into the industry. Certainly, then, it would have to be looked at and restructured, looking at the risk of the applicant and looking at what happens if somebody defaults, if they're not able to pay their loan, and some mechanism that if somebody did default, then that would go back to another fisherman in the community or another new applicant in that community or that area, rather than going to outside interests. I guess it would take a restructuring of the Loan Board to make this happen.

I wanted to ask, then, about the Fisheries Loan Board. How many loans do you have out at the present time, and what amount of dollars have you loaned in this province?

MR. D'ENTREMONT: Right now, as you alluded to, the board was created in 1936. So it's something that has been around for a very long time. There are 800 loans currently in the system. The outstanding principal is about $82,271,060, which I think is a phenomenal input into the industry. Our lending budget for 2004-05 was about $25 million, which we think, from that investment and from those loans, it maintains in the industry about 8,200 jobs across Nova Scotia. I think there's a fair amount of money out there. There's still a fair amount of money left to lend out to interested parties.

MR. PARKER: What is the interest rate that's charged to applicants, and do you know what your default rate might be?