May 27, 1996

RESOURCE ESTIMATES

COMMITTEE

Pursuant to Standing Order 87, Gerry Reid, M.H.A.,

Twillingate & Fogo, substitutes for Robert Mercer, M.H.A., Humber East.

The Committee met at 7:00 p.m. in the House of

Assembly.

CHAIR (Mr. Canning): Order, please!

We are meeting this evening to discuss the

Estimates for the Department of Forest Resources and Agrifoods. I propose we

begin with an opening statement by the minister. Perhaps you might want to

introduce your delegation and then I will introduce the members present.

MR. TULK: I have a statement that I am going to

read and I have prepared a copy for each one of the committee members if you

want to follow along. I don't want to make anybody believe that you are in

school but it is sometimes better. I found this morning when I was reading it,

to be quite frank with you, there was a fair amount of information that I think

people might find handy, not only for this evening but maybe for some Question

Periods or something of that nature.

This evening, I have with me, on my right, the

Deputy Minister, Mr. Hal Stanley; on my left is the Assistant Deputy Minister of

Forestry and Wildlife and Inland Fish, Dr. Muhammad Nazir, commonly known to

most people as Dr. Moe Nazir; on my far left is Martin Howlett, the ADM of

Agrifoods; behind me is Margaret Power, the Director of Human Resources with the

department, and I guess, with the Department of Natural Resources as well,

Margaret, is it?

WITNESS: Mines and Energy.

MR. TULK: Mines and Energy, I am sorry, used to

be the old Department of Natural Resources; and Len Clark, the Director of

Financial Operations with both departments.

Before getting into the -

CHAIR: Pardon.

MR. TULK: You want to introduce your people?

CHAIR: Exactly. I will introduce the members of

the House who are present and perhaps we can start with the Member for

Twillingate and Fogo; just introduce yourself.

MR. G. REID: Gerry Reid, MHA for Twillingate

and Fogo.

MS THISTLE: Anna Thistle, MHA for Grand Falls -

Buchans.

MR. WOODFORD: Rick Woodford, MHA for Humber

Valley.

MR. OSBORNE: Tom Osborne, MHA for St. John's

South.

MR. CANNING: Perry Canning, MHA for Labrador

West.

CHAIR: Minister, you may begin with your

statement and for your officials, if, at some time you answer a question, just

introduce yourself at the mike, because it is being taped for Hansard purposes.

MR. TULK: Okay, you will find in front of you

this sheet which I am going to run through: The Department of Forest Resources

and Agrifoods includes the disciplines of Forestry, Wildlife, Inland Fisheries

Management, Conservation of Biodiversity, Agriculture and Agrifoods.

The total gross budget for the above-mentioned

disciplines is $52.69 million, which includes $5.1 million capital expenditure.

It has a $26 million allocation for Forest Resource management; $10.1 million

for Inland Fisheries, conservation of biodiversity and Wildlife management;

$13.1 million for Agricultural development and $3.377 million for Administrative

and Executive Support.

The net expenditure, excluding related revenues for

the department, is $44.1 million as compared to $46.8 million last year. On the

surface, it is only 5.5 per cent less than last year. However, if we exclude the

programs which are fixed in nature, such as forest fire fighting and various

cost-shared commitments with the Federal Government, and also count some

extraordinary additions to this year's budget, the reductions in some of the

other programs are as high as 25 per cent to 30 per cent and, in a couple of

instances, even 100 per cent.

Before I discuss the individual programs, I should

take a few moments to reflect on the contribution of our natural resources of

Forestry, Wildlife and Agriculture to our economy and our well-being. The Forest

industry employs directly and indirectly over 10,000 persons in this Province.

The major industry, of course, is the Pulp and Paper industry, which produces

newsprint with a value of shipments of approximately $670 million last year. The

industry, after a long downturn, is in a profitable situation mostly due to high

newsprint prices and some cost-cutting measures.

During the last few months, the newsprint prices

have come under pressure, which has forced the industry to take some downtime to

balance the supply with demand. The industry is still expected to make a healthy

profit this year. The pulp and paper industry is planning to carry out

investments in improving the pulping technology, modernization of some of the

paper machines and various environment-related capital projects. The total

capital investment for this year is expected to be in the order of $90 million.

The sawmilling industry, while much smaller in

total value of products, generates in the order of $30 million value of

shipments but its influence on the rural economy of Newfoundland and Labrador is

very pervasive because of hundreds of small-scale mills throughout the Province.

This industry is expected to reach another high during this year. After

struggling for several years, the industry is transforming itself into a more

progressive industry with increased integration of lumber and chip production,

kiln drying and various value-added products which are being exported to Europe,

U.S.A and Japan; and I might add that there is a number of those places around

the Province that we should take a look at and a number of them being proposed,

that use the total log, the total wood.

The forest industry has faced wood supply problems

for the last many years which are related to past large-scale insect

infestations and to historic imbalances between various age classes of the

forest. This is also influenced by expansion of capacity in both pulp and paper

and sawmilling. With the increasing awareness for various non-timber values of

the forest resources, there is additional pressure on the wood supply because of

various environmental and other ecological and cultural considerations which

reduce the available area for harvesting.

Wildlife resources of the Province provide the

basis for both economic and recreational uses. Newfoundland has one of the

highest participation rates in hunting and fishing by its residents. There are

over 113,000 qualified hunters in this Province. Almost 25,000 persons

participate in salmon fishing. Since we do not have a licencing system for trout

we do not have an exact number for people engaged in trout fishing, but

estimates range from 60,000 to 100,000 people who participate in trout fishing.

The Salmonier Nature Park received 53,000 visitors last year. Our wildlife

resources contribute significantly to our way of life, recreation, and economic

and spiritual well-being. Newfoundlanders and Labradorians spend about $200

million on wildlife and inland fish related activities every year.

Big-game wildlife populations are thriving. We have

reached this year the highest level of population and hunting quotas for caribou

in the history of this Province. Moose populations, though slightly less than

last year, are still the third highest. The partridge population is rebounding

after a decline for the past few years. Snowshoe hare populations are still low,

but we expect their recovery soon. On a sad note, I must say, the pine marten

populations on the Island have dropped further, and that has resulted in this

animal being declared an endangered species.

Agriculture in one form or another has had a long

history in our Province and has long been associated with the lifestyle of rural

Newfoundland and Labrador. The raising of livestock can be traced back to the

Vikings, and root crops were grown to supplement the diets of the first

permanent European settlers. The agrifoods industry is generally a rural-based

resource with production and processing spread over the entire Province.

Since 1988, agriculture has been the only resource

sector that has made positive growth, an average of 4.35 per cent. It has also

exceeded the Province's average rate of growth in GDP by 2.15 per cent. It has

withstood the negative impact of a national economic decline and generally

continues to prosper. Farm cash receipts have increased over 90 per cent since

1982, from $33 million to over $63 million. Significant increases have occurred

in the dairy, fruit, potpourri, floriculture and nursery sectors. All other

commodities, with the exception of the hog industry, and in more recent years,

the fur industry, have continued to expand.

It can be demonstrated that increased production

rather than general inflation has been the influencing factor in the increased

value of farm cash receipts. In addition, productivity gains have occurred in

most commodities. For example, annual milk production per cow increased from

3,600 litres in 1983 to 6,300 litres in 1994. Annual egg production has

increased from twenty dozen eggs per bird to an estimated twenty-three dozen

eggs per bird. Newfoundland farms equal or exceed national productivity

standards in many commodities.

Some success in reducing Newfoundland's dependence

on imported feed has also been achieved. Since 1982, forage, hay and silage

production has increased from 8,000 acres with a yield of 1.8 tons per acre to

13,500 acres with a yield of 2.8 tons per acre. Total farm operating expenses

and depreciation charges increased from almost $30 million in 1982 to

approximately $56 million in 1994, an increase of 76 per cent. By comparison,

aggregate net farm income increased from slightly over $0.6 million in 1982 to

almost $8 million in 1994, an increase of over 1,350 per cent.

Clearly significant strides have been made in

developing a viable industry. However, this development has been achieved at a

substantial cost to industry as measured by outstanding debt. In 1982

approximately $16 million was owed, compared to over $39 million in 1994, an

increase of over 143 per cent. According to the 1991 census on agriculture, the

current value of farm capital was $110 million in 1982 compared to $176 million

in 1991. The resulting effect has been a decrease in the equity ratio. Producers

have had to borrow significantly more to finance expansion and improvements.

In 1981 there were 284 farms reporting sales

greater than $2,500 compared to the 525 reporting higher sales in the 1991

census on agriculture. Significant increases in the number of larger operations

have occurred and particularly with farms reporting sales of greater than

$50,000. The number of farms in this category has increased by over 71 per cent

and farms with sales of over $250,000 have increased by over 151 per cent.

Review of 1995; in 1995 the agricultural industry

turned in a fair performance. An improved showing in the livestock sector,

primarily dairy, chicken and eggs, resulted in total farm cash receipts reaching

$63.6 million, a 1.1 per cent over the previous year. The major commodities were

dairy, $22.4 million; poultry at $16.1 million; eggs, $8.6 million; vegetables

$4.0 million and floricultural and nursery, $2.8 million. Secondary food

processing also grew last year. Sales of manufactured food products, excluding

fish, reached $130.5 million, an increase of 5.7 per cent, as companies continue

to successfully market their products both inside the Province and abroad.

There are many examples of successful Newfoundland

and Labrador companies involved in the production, distribution and export of

various local value-added products. The private sector successes that have

contributed to increased economic output includes numerous varieties of

speciality jams, jellies, relishes and sauces made from local fruits, berries,

flowers and other unique items; blueberry and partridgeberry wine, speciality

chocolates, locally roasted coffees, fresh herbal products and beeswax candles.

As an example of export potential, a local restaurant entrepreneur has expanded

the market for Newfoundland and Labrador-produced fresh pasta, sauces and other

products into the United States by expanding the chain of Newfoundland and

Labrador-owned restaurants in the Boston area.

Contribution to employment; the importance of the

agricultural industry as a valued and productive part of the Newfoundland

economy is often underestimated.

In the early 1990s, it was estimated that there

were 300 full-time positions, 450 part-time jobs, 800 casual workers and 1,000

family workers for a total of 2,500 direct on-farm workers. In addition, there

were 700 positions associated with the processing and grading in the broiler,

egg and dairy sectors and an estimated 300 persons involved in off-farm

processing of other commodities. This represents 3,500 jobs directly

attributable to the industry. With regard to feed suppliers, transporters,

manufacturers of packaging material and other related services, there is no

reliable data on employment. Nevertheless, it is estimated there are 4,000 to

5,000 jobs directly and indirectly related to the agricultural industry in the

Province.

Now, coming back to the Budget Estimates, as

mentioned earlier this year this budget is difficult to compare with last year.

Significant reductions have been made in silviculture, access road construction,

administration of forestry operations, private woodlot program and nursery

operations. In silviculture a $1.6 million reduction has been achieved by

renegotiating silviculture agreements with the pulp and paper industry. This

will enable us to maintain the total size of the program at last year's level.

The pulp and paper industry will be contributing more. Approximately 6,000

hectares will be treated on Crown land, Crown-held forest lands. Another 6,650

hectares will be treated by Abitibi-Price and Corner Brook Pulp and Paper.

The silviculture operations will consist of

planting, thinning and site reclamation projects. The company and Crown

silviculture programming, including the cost of nurseries, will cost $10 million

during 1996-1997. I would like to point out that silviculture is a labour

intensive forest enhancement activity which employs 500 to 600 persons every

year. During the last two decades $117 million has been spent by industry and

government on silviculture in this Province. This resulted in 201,000 hectares

of forest land being silviculturally treated including 92,500 hectares of

thinning and 42,500 hectares of plantations; 108 million trees have been planted

so far.

As I mentioned earlier, the roads program has also

been reduced by $600,000. We have re-prioritized the roads program, some of the

operators will be asked to build their own roads and avail of reduced stumpage

rates. This year's program has eliminated the private woodlot program on the

Avalon, however, we have maintained the private woodlot management program in

the western region. It is mostly located in the St. George's area. The private

woodlot management program in the eastern part of the Province was not directly

contributing to the wood supply for the industry. It was designed to release

pressure on the wood supply by providing more firewood species and Christmas

trees. The woodlot program in the western part of Newfoundland is providing and

is expected to provide in future, significant volumes of wood to the industry.

The program in the western region has therefore been retained.

The budgetary constraints also force us to phase

out one of our smaller tree nurseries at Brookfield Road in St. John's. This

will not impact on our reforestation program. The Wooddale Tree Nursery will

provide the necessary seedlings. Some urban forestry programs and supply of

trees to non-profit organizations will be impacted.

Faced with the budget restraints, the department

was successful in maintaining the level of law enforcement and monitoring and

other field operations. However, we were forced into reducing the administration

of our field services by reducing the number of regions from three to two on the

Island by combining the eastern and central regions. Similarly, we reduced the

management positions in our districts.

The budget for fire management remains essentially

unchanged with the exception of a portion affected by the amalgamation of

regional offices.

Because of the increased forecast for hemlock

looper infestation, the insect control program is expected to be much larger,

95,000 hectares as compared to last year, 48,000 hectares. The budget for the

insect control program has therefore been increased by over $1.3 million to

accommodate the larger spray program. Most of this, of course, is shared by the

pulp and paper industry because of the location of this year's program on their

limits.

In the case of wildlife management, the budget

provides for continuation of big game surveys started two years ago. These

surveys have allowed us to increase quotas for caribou for both resident and

non-resident hunters. We are also able to provide a five-year allocation of

moose and caribou to the outfitting industry. Similarly, the cost-shared salmon

enhancement program has been maintained.

We have to curtail some expenditure on various

wildlife field studies under the Wildlife Monitoring Program. Like forestry, the

regional offices for wildlife have been reduced from three to two on the Island,

again, by emerging eastern and central regional offices.

Last year an inland fishery

section was created in

the Wildlife Division. Funding has been provided for the operation of this new

section.

Limestone sales: Due to the generally acidic nature

of our soils, it is critical that appropriate levels of limestone be applied.

Given the recent termination of the Federal Feed Freight Assistance Program, it

is even more important today as farmers strive to become self-sufficient in

quality forage and explore opportunities for grain production.

On March 31, 1996, the contract with Havelock Lime

for the supply of agricultural limestone expired. Consequently, the department

made a public call for proposals for the supply and distribution of agricultural

limestone in the Province. As a result, I am pleased to inform the Committee

that a Newfoundland company has been selected and the department is currently

finalizing the contract for signatures. It is signed now, isn't it?

AN HON. MEMBER: It is gone out to them.

MR. TULK: It is gone out to them. Okay.

Limestone will be provided to farmers at $20 a

tonne for bulk and $50 a tonne for bagged.

Safety nets: In 1995 Federal Budget, Agriculture

and Agrifood Canada placed a high priority on safety net funding. Since that

time, discussions have been ongoing with all provinces on the appropriate

mechanism for the design and delivery of the program. As a result, it is

expected that the Province and the Federal Government will find a Memorandum of

Understanding governing this area in the near future.

This will be a cost-shared Federal/Provincial

initiative to enhance long-term stability for the provincial agriculture

industry. The initiative will serve as `companion' programming to the CORE,

National Safety Nets Program, NISA - Net Income Stabilization Account Program,

and Crop Insurance.

Programming under the framework agreement will

include enhancements to these existing CORE Programs, to improve their

responsiveness to the provincial needs. In addition, programs will be designed

to address research, development, marketing, value-added and diversification

needs - agri-food innovation program - in order to foster conditions in the

industry which will improve in the long-term income stability.

There will be a three-year agreement, from 1996 to

1999, under the Federal Agricultural Safety Nets Budget Envelope. Newfoundland's

annual share of Federal funds is a total of $1.2 million, which must be

cost-shared on a 60/40 basis.

And finally, Newfoundland Farm Products

Corporation: The Budget announced a new Board of Directors for Newfoundland Farm

Products Corporation will be appointed to commercialize the corporation and

pursue privatization. It is my intention to move quickly to put this Board in

place. The operating grant to Newfoundland Farm Products Corporation is lower in

1996-1997 than in 1995-1996. The reduction is mainly the results of improved

productivity and new and aggressive marketing initiatives undertaken by the

corporation in the past year.

Thank you.

CHAIR: Thank you, Minister. I would ask the

Member for Baie Verte if he wishes to respond to the opening statement by the

minister.

MR. SHELLEY: Thank you very much.

First I want to apologize for being a couple of

minutes late and I also want to apologize beforehand, I guess you could say,

just to inform the minister and let the Committee know that I may have to leave

very quickly. My wife and I are expecting our third child, and she is about to

go into labour; that is why I have the cellular phone here. I hope the minister

doesn't mind.

MR. TULK: Not nervous, are you?

MR. SHELLEY: No, I was there earlier today,

actually, and left again. My mind is elsewhere, I will be up front with you, at

this moment. But I have a few questions to get started on and then I am able to

leave. My two colleagues have a few questions, I'm sure.

CHAIR: Perhaps, Paul, for the record, if you

could just introduce yourself.

MR. SHELLEY: Okay - Paul Shelley, the Member

for Baie Verte.

MR. TULK: Paul, (inaudible).

MR. SHELLEY: Yes I do. This is Kim Puddester,

who is with our staff.

MR. FITZGERALD: Roger Fitzgerald, MHA for

Bonavista South.

MR. SHELLEY: You've introduced everybody else?

Okay.

First of all, I would like to make a few general

comments, and I have some specific questions on the estimates. I will try to go

through them as quickly as possible.

First of all, I suppose, officially to congratulate

the minister on his much-awaited portfolio, I guess you could say. Because I

know, over the years we have been on the same Committee with estimates and had

some questions, not surprisingly, I shouldn't say, but with a lot of common

concerns about forestry and agriculture in this Province and where it was

heading. Then, we all have concerns in general about the forestry and, of

course, the analogy is always used of the fishery. There are some good

comparisons when you talk about the forestry and the fishery in this Province,

especially in respect of its being a renewable resource that we have to manage

properly. And if we don't manage it properly it could meet the same fate as the

fishery.

Of course, there are people out there who will say

that we are headed that way, and there are others who say we are not. Instead of

arguing back and forth, I guess what the minister's job is, and his

department's, is to make sure that we are on line and taking the proper steps so

that down the road we don't see the same crisis in the forestry as we see in the

fishery, and that this minister or any other minister doesn't have to stand and

say: We are having a moratorium on the forestry, and sooner or later standing to

the point where we say you can't cut a log to heat your home, like we can't

catch a fish to eat now. Hopefully, it will never come to that.

Mr. Chairman, there are a lot of specific

questions. I will try to get with them and deal with some of them, and then make

some general comments again later. The first one I want to go directly to is

2.3.01, the Economic Renewal Agreement. Of course, we know what the agreement

is. I want to ask the minister here to just give us an update, I guess, of where

you think those dollars will be spent, more specifically than what is stated on

page 144.

MR. TULK: Are you asking now?

MR. SHELLEY: Yes.

MR. TULK: Most of that money, I think, will be

spent - if not all of it, I believe all of it - for the establishment of a

forestry centre in Corner Brook. Professional Services, you see, is $200,000, I

guess Purchased Services will hopefully represent what we think will be this

year's budget. I can say to the member, there has been a fast-track

schedule

that has been established which will see the detailed estimates and

architectural design and drawings completed by the end of July, and hopefully, a

tender call for construction by September 1996. Actual construction is to be

completed by July 1997.

We have allocated $3 million, as the estimates

show, for construction in 1996-1997, with the balance of $2 million to be spent

in 1997-1998. I wouldn't ask the member, as he knows, to hold me to any of those

dates exactly, because as you well know, and everybody know it, in the

construction of new facilities and so on anything can happen that will delay you

for a period of time. But it is the intention of the government and the

department to pursue this project in the fastest possible manner.

If I could, Mr. Chairman, revert to just some of

the general statements - we can come back to this one - that the member made in

his opening remarks, in which he compares forestry and fishery, I couldn't agree

with him more in terms of the management of fisheries and the management of

forestry. I think it is with that kind of lesson - and I take no credit for

this; it was done before I got into the department - but I think it is with that

kind of thought or that kind of concept that the department itself has

undertaken to look not at forestry but at an ecosystem, a land-based ecosystem

of which trees are only a part. There is presently a structure that is being

worked on by the department and it basically deals with the governance, if you

will, and the maintenance and the monitoring of an ecosystem in forestry.

I want to say to the member that since becoming the

minister I had concerns and I still have concerns about a wood supply shortage

in this Province. I think we might be able to manage - and I underline this word

- manage our way through it. I wouldn't want to say to him that there is no

shortage of wood in the Province. There is a shortage of wood on the Island

portion of the Province, there is no doubt about that. If we could access all of

the wood that is in Labrador, then there would not be a wood shortage in the

Province.

At this point in time, though, we are dealing with

a lands claim negotiation with the aboriginal people, and until that is resolved

and until we have resolved some other issues on just how we are going to take

that wood out, and I suspect we will resolve some issues with the people of

Labrador themselves as to where the resource is best used, then we do have in

the Province a shortage of wood, and we have a shortage of wood primarily caused

by the fact that there is a wood shortage on the Island portion, so I am not

going to try to say anything different from that. We think we can manage our way

through it because the pulp and paper mills, as you know, are now importing wood

from places such as Prince Edward Island and so on. I don't know how far along

we can take it, but we have had to do that, and we will probably have to do it

for some time.

I want to impress upon him, though, that if he

should get the opportunity over the summer, I would advise him as the Opposition

spokesman on Forestry to take a trip with me - and again, it is nothing that the

Member for Baie Verte or the Member for Bonavista North had anything to do with,

I can assure him of that - but I would like for him to take a trip with me

around certain parts of this Province and look at just what has been done in

silviculture. I tell you that I took a trip on the West Coast and a couple trips

up the Northern Peninsula and in other areas of the Province and there has been

a fairly good job done. And while we have a wood shortage today, I will predict

to you that in twenty to thirty years time, because of the efforts of not only

this government but other governments as well, there is going to be enough wood

to take care of our future needs, if we can get over this hump, so to speak.

I don't know if there is anything else you want to

ask about the Forestry Centre in Corner Brook - I suspect there is.

MR. SHELLEY: Yes. Thank you very much. Well,

first of all just to rebut and comment on your asking me on a trip. I would love

to look at more and I will let the minister know, too, that I did take a trip

with Abitibi in their helicopter last year and saw some good things that have

happened with silviculture in certain parts of the Province and I agree with

you, and I hope we are on line. I think we are moving in the right direction.

MR. TULK: I think so.

MR. SHELLEY: I have never said we were not, and

I agree with you that, maybe in twenty or twenty-five years time, yes, we will

be okay; but what I am mostly concerned with, and I am sure you are as minister,

is the interim, talking about the next few years. As a matter of fact - and I

will be more specific now - a lot of times I will refer to my district for

obvious reasons as I know it better than other parts of the Province but, of

course, it reflects other parts -

MR. TULK: Actually, I was going to say

something to you about it, but go ahead.

MR. SHELLEY: It reflects other parts of the

Province, too, and I am going to ask you some questions about Labrador, which

you have already referred to, and we will have more questions on that. But it is

the interim I am wondering about, and of course, it is a general statement

again, but as far as the two major companies in this Province, Abitibi and

Kruger are concerned, we all know that there has to be a balance struck between

profit line and what they have to do in order to maintain those profits and stay

viable in this Province and employ the thousands of employees that they do. But,

we also have to look at the full utilization, not just of the tree but of the

industry, and what I mean by, No. 1, the tree, is that everybody, from the

logger, the jobber to the sawmill operator right on up to the guy who works for

Kruger and Abitibi - the full utilization of the tree. I know, I have heard the

minister say that before in these estimates meetings and we both agree on that,

but also, the utilization for the whole industry.

For example, the Kruger land now, what has been

able to be utilized by other people who are not with Kruger and not in those

unions and so on. We know right now that we have a problem with land that has

been given back to the Crown by Kruger, and I ask you this question for the

people in my area who have asked me to ask it: In the initial agreement, I think

Kruger had something in the agreement which said that they would have the first

chance to buy the wood that was passed back to the Crown on Crown land. Is there

also something in that same agreement which says that they would have to buy it

back at their nearest competitor? In other words, if they are given the first

chance to buy that wood back, do they pay the same price as their competitor

would have paid?

MR. TULK: No, they won't.

DR. NAZIR: They have two types.

CHAIR: Could you just introduce yourself,

please.

DR. NAZIR: Moe Nazir, ADM, Forestry and

Wildlife.

Kruger has two types of right of first refusal. One

is in the Mount St. Margaret area where that land was part of the core wood

supply and they did not want to give up that land. Different from the rest of

the Northern Peninsula, that agreement requires everybody to offer wood to

Kruger - that applies to only two Reid lots - before they can sell it to

anybody. If Kruger is not prepared to make a deal, then there is an arbitrator

whom the minister can appoint. If Kruger does not accept the ruling of the

arbitrator, then people are free to sell anywhere they can if the price is not

agreed to.

But the rest of the right to first refusal, Kruger

has to do better than Abitibi-Price, its competitors. It is not exactly the same

price. They have to offer at least a dollar, or something like that, more. So it

has to be a slightly better price than the competitors.

MR. SHELLEY: A slightly better price. Okay. I

have also had some concerns raised that the wood standards set by Corner Brook

Pulp and Paper this year are a little bit higher than what Abitibi standards

were last year, eight centimetres on top ends compared to five centimetres for

Abitibi. Loggers are telling me they are going to have trouble - they think this

will result in a greater amount of wastage in the wood. Would you like to

comment on that?

DR. NAZIR: That is true, their standards are

slightly different, but Kruger also needs to buy wood eventually if they have to

supply their mill. For this year they are okay. Eventually they will have to

match Abitibi-Price's price as well as standards if they hope to get that wood,

which is cheaper, non-unionized wood. So that is why some of the people are

bypassing Corner Brook and delivering wood to Stephenville. Once Kruger find

they cannot buy the wood and be competitive, they will eventually change. Since

there are two buyers in the Province, there is an alternative at this time.

MR. SHELLEY: It was a letter written by some

loggers that asked that question. They have grave concerns about it. Maybe I

will ask them to write the minister and talk about that specifically.

MR. TULK: Do you have the letter there?

MR. SHELLEY: Yes.

MR. TULK: Do you want to table it and let me

take it and reply to it?

MR. SHELLEY: Well, sure, yes, I will table

this, Minister. This is to me, as being their member.

MR. TULK: Yes. Read it into the record, too.

MR. SHELLEY: I will read it into the record. It

is a letter from the Baie Verte Peninsula Independent Lumber and Loggers

Association. I will table it for the minister and have him peruse it, and maybe

respond to me later.

Another specific, now. In 2.1.01, Forest

Management, there is an overall decrease of $429,800, estimates revised from

1995-1996. Could you elaborate on those?

MR. TULK: It is $4,890,800, down from -

MR. SHELLEY: It is a decrease in that section.

MR. TULK: - down from $5,699,300.

MR. SHELLEY: Yes.

MR. TULK: Could you explain - Moe, do you want

to take that?

MR. SHELLEY: Amount voted. Why is that decrease

there?

DR. NAZIR: We had to take some reduction in

this activity just like others. There are a number of positions at Corner Brook

which were given up: four in the current round, and there were two or three

previously. Also, we have reduced by about $100,000 one of the programs, the

utilization program, and there is reduced travel cost. There are reductions all

over in that sub-program.

MR. TULK: I think it is important to point out

to the member that Purchased Services, which last year was $1,140,300 and

revised at $1,050,000, is now up to $1,249,000, or $1,250,000 approximately. I

guess that has to do with the increased effort we are going to put into insect

control this year.

So it is important, I think, that while we have cut

certain other areas - and I think this is a poor place for this to be, by the

way, the insect repellent or the insect protection. Insect control should

probably be somewhere else but I think it shows that we are increasing our

effort to control the amount of insect damage in the Province's forest.

MR. SHELLEY: Well, that's good because that was

my next question, why that was increased there and the overall was decreased.

MR. TULK: We are trying to do more with less.

MR. SHELLEY: Okay, on insect control - and as

the minister knows from the question I asked in the House - is the expertise

directly related with insect control that was done by the forestry centre here?

I did ask the minister this in the House and I ask him again now. We will just

elaborate a little bit on it. First of all, to make sure I am correct on that,

all the research and most of the work done on the hemlock looper was actually

done specifically by the people here in this Province at the St. John's forestry

centre? Is that correct, first of all, that the research - on the hemlock looper

specifically.

DR. NAZIR: Yes, there were insect and disease

surveys which were being done here. Are you referring to that one?

MR. SHELLEY: Yes. So that was all done by the

St. John's forestry centre here?

DR. NAZIR: That's correct. They are being done

out of Corner Brook and Pasadena and that money is provided in the insect

control, $420,000, a little over $400,000. The remaining $4 million is for the

insect control spray program itself, a little over $400,000 for that type of

work which CFS used to do, and that now the two pulp and paper companies have

agreed to cost-share with us.

MR. SHELLEY: Okay, right now in this budget

most of the money is allotted for the surveying and the spray program for this

summer. Now, ongoing research and so on, in reference to insect control, will

that be now done in this new building in Corner Brook?

MR. TULK: The answer to that is - as I said to

the member in the House the other day - as far as I can understand and I believe

it to be correct, that will be the case. While we have lost certain things in

the shift with the national forest service in the number of workers now employed

by those people or who were laid off by them, I think it is the intention to use

the forestry centre in Corner Brook to not only teach but to increase the amount

of research - if you want to, to focus in on any type of research that is needed

for forestry.

As a matter of fact, I think you will find that the

idea behind this forestry research centre is not only to make us the best in

Atlantic Canada but probably the best in the country. I think the aim and the

objective of that forestry centre is to - and they focus attention in one area

to carry out the types of research that was done with the hemlock looper and

other insects as well. I don't believe you will see any decrease in the amount

of knowledge, shall we say, or in the techniques for fighting insects such as

the hemlock looper as the result of anything that has happened in the past. As a

matter of fact, I think it is our hope that you will see us become far more

proficient at the things we do in terms of research and development as a result

of that centre.

MR. SHELLEY: Well, I agree with the minister,

and I will say this, it was a sincere concern because I have talked to people in

the forestry centre and from all I can gather, they have done some superb work.

They have been recognized right across Canada for the work they did on insect

control, the hemlock looper and the budworm and so on. Of course, the minister

knows, we took care of the budworm, but the hemlock looper is the problem now.

The question is still specific and I hold the minister to what he said, that

research will continue, not that the spray program is going to go on for this

year but that the research is continued with insect control. We all know in the

forestry industry that that can be a most devastating thing to the forestry

industry, the potential outbreak of the hemlock looper, budworm or anything. So

I want to make sure that, not the spray programs or whatever but the continuing

research that is done specific to Newfoundland forestry is still done and

continual research will be done here in Newfoundland. The last thing we all want

to see, I know that I want to see, is that we are getting research done in some

centre in New Brunswick.

MR. TULK: Let me just try to allay the member's

fears. The forestry centre in Corner Brook, as I understand it, will bring

together three programs, and I will deal with just one of them because it

answers your question specifically, I think. One of those is the Canadian Forest

Service, which is part of the federal Department of Natural Resources.

As I understand it, the thirty professional,

technical and post-graduate staff of CFS will be pursuing research on forest

ecosystems and strategies for achieving sustainable development in our forests,

in that centre. In addition to that, I don't believe that if you are going to do

research today, you have to have as many bodies as, say, you did fifty years

ago, or ten years ago. We do know that we are into the age where you can walk

into your office and I can walk into mine and we can be in contact with people

anywhere, practically, in the world on certain developments. This forestry

centre, I think it is the intention to interface, to be connected with, other

developments and other research centres in the nation, and I guess in the world.

In that sense, I think you will see the same type

of research and probably better even, by the thirty people who are left in the

national forest service in Newfoundland, shall we say, working out of that

centre. I think you will see better research done than we have seen in the past

even. I agree with the member that that research has been well done.

MR. SHELLEY: I will ask another question and

then I will give my colleagues a chance to ask a couple of questions. In 2.2.02,

Fire Suppression and Communications, there is an overall budget decrease of

$172,900.

Just to make a comment on that, and I've got

nothing to back this up, really, it is just my way of thinking, but we have had

a dry winter, there is no doubt about it. I can only guess, and it is only a

guess, that we are going to see a tremendous increase in the number of forest

fires this year. I hope I'm wrong. Of course, we all hope. Like I said, there is

no scientific knowledge to back this up, but I believe we are going to have an

increase in forest fires. What has been put in place in your budget in case this

happens? I don't see it. There is a decrease there.

MR. TULK: I am told the amount that is

available - well, let me start off with what have we done. The truth is that if

I could take what the member said, I guess it is fair to say that the department

itself, the officials in the department, believe that the same thing is

possible. One of the first things I got hit with - this summer, when I started

to move around the Province and meet with Forestry officials, one of the first

things they would say was: Minister, this is really a dry year. We haven't had

snow, and it looks like we could be in for a terrible year in terms of fire. I

think that is what the member is talking about.

I think you will find that most of the reductions

there are just in salary savings that we could make. We are ready. I think it is

fair to say that we are ready. Our people have been on stand-by and our fire

crews, I believe, were called back early to make sure that we have people in

place. We have had fires already in the Province. I don't know the exact number

but I think it is somewhere around thirty.

MR. SHELLEY: They are up, aren't they? Is that

right?

MR. TULK: Yes, there are somewhere around

thirty fires that have burned over something like fifty or sixty hectares of

forest land. I get the report periodically. I don't have one for this week. I

have one for last week and I think it was fifty - don't hold me to this as the

exact figure, but I think it was fifty-six hectares that had been burnt over as

of last week.

I think we are ready. I can assure the member of

this, that we will, as a government, do whatever is necessary to protect the

forests in the Province. Don't get me wrong. As you know and as I know, there

are times in this Province - and I remember 1961, which is some thirty-five

years ago. I was a part of it. I was two years old. I was a little bit older

than that. But some thirty-five years ago in 1961 I can remember the fire in

Bonavista North.

AN HON. MEMBER: (Inaudible).

MR. TULK: I'm thirty-seven now. I can tell you

that with that particular fire - I believe you were a young forester at that

time, weren't you? There was nothing that any amount of equipment or government

intervention could do at that point. Our hope, and I think we have been fairly

successful to this point, keeping our fingers crossed, is to stop a fire before

it gets out of control. We have our people assembled around the Province, geared

up, ready to go. I think it is safe to say - Moe, you might want to comment on

this further, or Hal, either one of you - but I think it is safe to say, thanks

to the efforts of these people on both sides of me, that we have one of the best

fire-fighting capabilities in the country, and we need it.

I wouldn't want for anybody to hold me to it that

there aren't going to be any forest fires this summer, I don't know; we just

keep our fingers and our toes crossed.

MR. SHELLEY: I know that, but the point being

that if it happens and we all hope and pray it doesn't, but we do not have the

luxury of holding back on the dollars, I mean, you spend what you have to spend

at that time. So that is why, when you see a reduction for this particular year,

I don't think we are off range by anybody in guessing that we could have a -

MR. TULK: If you look, though, at the total

forest protection, I think you will see it has gone from $2.5 million budgeted -

MR. SHELLEY: Where is it?

MR. TULK: Are you talking about 2.2.02?

MR. SHELLEY: Yes.

MR. TULK: The total forest protection has gone

from $2.5 million to $2.6 million.

DR. NAZIR: Fire itself is slightly lower.

MR. TULK: Fire itself is slightly lower.

MR. SHELLEY: Yes, $2.6 million.

MR. TULK: Yes, it is down some $38,000 and you

will note that last year, even though it was budgeted at $1.98 million, in

reality, we spent $2.12 million, which shows that there are times when

governments spend more than they budget for this kind of thing. I can say to you

that the officials in this department, sometimes under political pressure, have

not given in to it.

For example, I have a fellow who sits on the left

with me, who, I think if you sold the two water bombers that he was

instrumental, I believe, in getting last year, that he would probably disown us

all. And I intend to stick by him and see that those two water bombers stay,

because I think it is vital that we have the kind of capability that we have,

and I think it is safe to say, Moe, that we have as good as anywhere in the

country and we intend to try to maintain that because our forest is important.

MR. SHELLEY: Okay, thank you. Mr. Chairman, I

will yield to my colleague and then ask a few questions.

CHAIR: Thank you, Paul. The Member for

Twillingate and Fogo, do you have any questions?

MR. G. REID: On Agriculture, I am just

wondering about that feed freight subsidy now that the Federal Government has

removed that. I know it is having a negative impact on agriculture and there was

some talk last year about a feed mill being built in the Province. Is there

anything happening on that? That was private sector.

MR. TULK: I will leave some of the details to

the Assistant Deputy Minister, Mr. Howlett, but yes, the feed subsidy is gone

and there is no doubt it has caused a great deal of hardship for some of the

producers in the Province. There has been a program put in place, that I think,

over three years - Marty, I think it is three years, gives $8.8 million in

Atlantic Canada?

MR. HOWLETT: (Inaudible).

MR. TULK: Pardon?

MR. HOWLETT: (Inaudible).

MR. TULK: Yes, I know, I will get to that, but

the replacement for the feed subsidy that was in place by the Federal

Government, the freight rate?

MR. HOWLETT: Yes, over a three-year program.

MR. TULK: Over a three-year program is what?

MR. HOWLETT: Over a three-year program our

producers will get roughly $10 million in lieu of that program.

CHAIR: Sir, speak your name into the mike.

MR. HOWLETT: Martin Howlett. In lieu of that

program, there is a three-year program introduced by the Federal Government that

will put about $10 million into the livestock industry in the Province

(inaudible).

MR. TULK: No, that still I think is somewhat of

a significant loss or significantly less than they would have gained through the

freight subsidy. But there is some talk in, shall we say, private industry,

there have been some approaches made which I do not want to discuss at this

point in time because we are still talking to some people; there are still some

people making approaches and I would not want to, at this point in time,

endanger what we are doing. But there are some talks underway about establishing

a single, milling/producing or whatever you call it, feed mill in one specific

area in the Province. Whether that comes to fruition or not remains to be seen

but it is there.

MR. G. REID: Yes. The other one would be in

Farm Products and I think there is a reduction of $1.2 million dollars over last

year?

MR. TULK: Yes. Well, as you know, it is no

secret that Farm Products has cost various governments fair amounts of cash in

terms of the subsidization. It is no secret either that there are some 335 jobs

- I think it is 335 jobs - Marty? - related to the broiler industry in the

Province, the chicken industry, and those are direct jobs, too, in that

industry. There have been talks ongoing with the chicken producers in the

Province, not the processors, the chicken producers, to put an effort into

forming an integrated company. That is still ongoing. And let me say this to

you, that Newfoundland Farm Products itself produces some of the finest quality

chicken under the Country Ribbon brand that you will find, I guess, anywhere in

the country. It is a product that we do not want to lose, and I give great

credit to the fellow who is - and I did not appoint him, again, he was there

before I got there; I give great credit to the fellow by the name of Eugene

Noftall and another fellow by the name of Dr. Peters who is now retired. But

Eugene Noftall has put a great deal of effort into trying to bring Newfoundland

Farm Products to a break-even point. And I believe, to be frank with you - I

know he now has some contracts with some of the larger grocery chains in the

country - I believe he is quite near to getting that processing side of the

industry to the break-even point.

The problem, to be frank with you - and I think,

some of the officials, either Mr. Stanley or Mr. Howlett might want to comment

on this, but some of the problem, I think, is in the cost of chicken. And the

cost of chicken is not that the poultry producers themselves are inefficient, it

has to do with where we are and our competition with the rest of Atlantic Canada

and the rest of the country. They are making all kinds of efforts to integrate

their industry and we are encouraging that. I think we will be meeting with them

sometime next week to hopefully move closer to the point where we have an

integrated industry in the Province, and one - because as you know and everybody

else knows, this not the day of subsidization anywhere in this country, anywhere

in the Western world. Anything that is subsidized today is in danger of having

to change its ways - not in danger, it is being pushed to change its ways.

Newfoundland Farm Products and the chicken producers in this Province are no

exception, and they are working at it fairly hard. I hope that we will see by

the end of this year - and you will see that reflected in the budget, that we

hope to have greater efficiencies. I think Eugene Noftall is making headway, and

I believe that you are going to see the chicken producers, farmers, if you want

to, themselves make that type of commitment this year. So we are looking to see

that done, therefore, you will see the reflection in that budget. We are hoping

to bring it down.

MR. G. REID: That is the reason I asked.

Because, as you said, they make some of the finest products, for sure, in

Canada. Again, as you said about Eugene Noftall, he is quite capable. I think

the problem with the cost of chicken, though, is related directly to the feed

and if we could get around that, I think, Farm Products would have no problem

standing on its own without subsidy.

MR. TULK: No. Well, I think that is borne out

by the way that we subsidize the industry. I think we finally got straightened

away between us all what we believe, that is to be the case. For instance, our

subsidy of the producers - and somebody will correct me, if I am wrong. Marty is

down there laughing. We pay chicken producers in this Province ten cents above

the Nova Scotia price, plus half their cost of production - wait now, half the

difference between the Nova Scotia price and their cost of production up to a

total of sixteen cents per kilogram. In the particular case - Marty, pass on

that thing you have worked out there. We had a discussion about it this

afternoon. In the particular case, for example, of where the Nova Scotia price

of chicken is $1.28 a kilogram, Newfoundland Farm Products price will be $1.38,

that is ten cents above the Nova Scotia price. And then let us assume that the

cost of production is $1.75, this is an assumption, the production subsidy would

then be sixteen cents, the total subsidy, the price to the producers would be

$1.55. So the difference in the Nova Scotia price and our chicken, in that

particular instance would be twenty-seven cents. The point is, there is a

substantial difference. Now why? The question you have to ask yourself is, why

is there that difference between the Nova Scotia price and ours? Well, the

answer, I think, is simple - it is called the Gulf, to be quite frank with you,

and the fact that efforts have been diffused all over the place. If you could

bring that back and combine it, I think - and part of that money flows through

Newfoundland Farm Products. And it looks as if Newfoundland Farm Products is

losing a lot more money than it really is. But I think we will be close to the

break-even point. Now, there are a couple of other things that have to be worked

out as well, but by-and-large, the feed problem is one of the problems.

MR. G. REID: Well, I guess if we didn't

subsidize, and we closed it, what would happen then is the chicken may be

cheaper coming from the mainland today, but if they knew we didn't have our own

chicken here it wouldn't be cheaper very long, would it?

MR. TULK: Right. Well, those fellows on both

sides may be absolutely proud of you. I said to them, well, if we can't get the

price of chicken down in Newfoundland, keep Newfoundland Farms doing it, we will

import it. Oh, yes, they said, a smart idea, but then as soon as you cut out the

production of Newfoundland chicken, see what they will do with their price.

MR. G. REID: And the same goes for the Milk

Marketing Board. I would hate to see what we got into if, importing our milk, we

had ice in the Gulf and we lost a full load of it on the way over from Nova

Scotia. I wouldn't want to see the cost of the next shipment that came in here.

MR. TULK: If you are not careful, if you don't

stop asking me these questions, the next thing you will see those fellows going

off to the Premier and asking to have me replaced and have you put there.

MR. G. REID: That's all I have, Mr. Chairman.

Thank you.

CHAIR: The hon. the Member for Bonavista South.

MR. FITZGERALD: Thank you, Mr. Chairman.

Minister, first of all, I would like to

congratulate you on your new ministry. If you listen to the people you are

surrounded with I think you will have a very successful ministry, because you

have yourself surrounded with some good people there and I am sure they will

pick you up every time you fall, or else they will trip you up before you fall.

As far as the Member for Baie Verte going on a

helicopter ride with you is concerned, I can only tell him about the ride that I

was on and the door came open up over Clarenville. I still think it was

intentional.

Minister, just to go back to Newfoundland Farm

Products again. We talked about the cost of producing chicken and the cost of

bringing in feed. We get a lot of chicken brought in from the Maritimes into

this Province. In fact, most of the restaurants, if you talked it around, they

don't buy from Newfoundland Farm Products because of the cost. What is the

difference in subsidizing the cost of chicken versus the cost of feed?

MR. TULK: What did you say? Is that a question?

MR. FITZGERALD: Yes, what is the difference in

subsidizing - or I suppose, the freight rate on feed versus the freight rate on

chicken? Because if you are subsidizing Newfoundland Farm Products you are also

subsidizing the broiler industry in the Province?

MR. TULK: Yes, primarily we are subsidizing the

broiler industry.

MR. FITZGERALD: So the cost of bringing in feed

is just as expensive - I mean the freight rates are just as expensive as

bringing in chicken, I would think?

MR. TULK: Marty, do you know?

MR. FITZGERALD: Do you know what I am saying?

MR. TULK: I would think, but I don't know.

MR. FITZGERALD: I would think that it is. So

then, why can't we compete?

MR. TULK: Why can't we compete?

MR. FITZGERALD: Yes.

MR. TULK: Well, I think there has also been the

idea that maybe we should centralize our operations with Newfoundland Farm

Products and not have two plants, one in St. John's and one in Corner Brook.

Now, whether that's the total problem or not remains to be seen but that's the

reason I have asked the government, and they have agreed, that we would put in

place a group of people - and I want to say the make-up of that board - I would

hope, and again it is up to the two components of the industry - will be made up

of two union people, two from the producers and three people, shall we say,

independent business-minded people to take a look at this whole thing and to

tell us once and for all what it would take to commercialize,, and in some sense

whether it is with the poultry people or not, the poultry producers or not, to

commercialize the industry.

So all I can say to you is that I think we will put

in place in the next while a process to - to be quite frank with you it is top

priority with me because I want to protect the chicken industry in this

Province. I think we would be foolhardy to sit here this evening or to sit

anywhere and think that any government, regardless of whether it is my

government or some other government, is going to subsidize the chicken industry

in this Province indefinitely to the tune of $5 million. I think we would be

foolhardy to believe that. Now, that doesn't say we are deserting it either,

that we should desert it immediately, but we have to work towards a solution

where we come as close to a break-even point as possible. I would hope that

those people that we put in place over the next little while will give us that

kind of advice, and I tell you, whatever kind of advice they give me, that's

what I intend to take.

MR. FITZGERALD: Yes. it seems kind of

interesting that it came up because it was only a couple of weeks ago that I sat

with a restaurant owner and he was complaining about the same thing, that he

would love to buy chicken from Newfoundland Farm Products, good quality, but

there is no way he can afford to buy it.

MR. TULK: Is our price that much different?

MR. HOWLETT: I think what is starting to happen

with Farm Products Corporation, is that the Corporation, I guess, under Mr.

Noftall has gone to a new marketing area. What they have done is, they have put

more emphasis on further processed products as opposed to fresh chicken. They

have gone from roughly 1.3 million about three years ago into further processed

products to over 13 million today. That is why the Corporation is starting to

turn around, because that is where they can make some money, in the further

processed product. So the fresh market, there may be, I guess, a shortage in the

fresh market if you are looking at, say, people who prefer to buy from Farm

Products if they could get it. The Corporation has started to produce products

that there is a demand for. You know, in the Country Ribbon brands, the strips,

the nuggets, the burgers and so forth, and that is turning the Corporation

around.

I have often made the comment: At some point in

time I hope all their production will end up in further processed. I think that

is where you are going to see this Corporation turn around and make some money.

Whether it is fresh chicken and frozen chicken, I think they can produce it and

market it and continue to lose money. That has been kind of the history here,

because if you look at the losses over the years they certainly prove that.

MR. TULK: I think if I could just add something

to - maybe throw in a couple of other things here to just clarify the situation,

to add on to what Marty said.

We still only with Newfoundland Farm Products

supply I think it is around 48 per cent of the chicken market in the Province.

Given the subsidies that we have there, we must at this time be producing it as

cheaply as - and I don't see how that should impact on the restaurant owner.

Maybe we don't have enough for him, that is possible, but I don't see how the

price would affect him. Because there is a large - and I don't want to name him

because he is right in the process of signing a contract with them - but there

is at present one of the larger and, shall I say, more frugal food chains in the

country presently on the verge of signing a contract, if they haven't already

done so, with Newfoundland Farm Products. So we must be, given the subsidy that

we have there, producing it just as cheaply. We may not be producing enough to

satisfy your restaurant owner, but I think we are producing it just as cheaply

as anywhere else, when you throw in the subsidy that we give, the $4 million or

$5 million a year that we throw in. So it may be quantity as opposed to price.

MR. FITZGERALD: A couple of years ago there was

a concerted effort by government to sell Newfoundland Farm Products, and I know

there were several proposals that came forward at the time. Obviously, they all

must have got weak-kneed and left. Is the Corporation still for sale? If it is,

is there anybody now interested in buying it?

CHAIR: If I could pause here for a second. I

see Paul is leaving. Paul, on behalf of the Committee, and I'm sure all of us

who are here, best wishes tonight for you and your family. These are exciting

times. It is indeed reflective of your determination to be here that you are

spending time here tonight.

AN HON. MEMBER: (Inaudible).

SOME HON. MEMBERS: Hear, hear!

MR. E. BYRNE: Important stand that some

progress has been made.

CHAIR: I'm sorry, Roger.

MR. FITZGERALD: It's okay.

The question I asked - I know that there were some

people interested a couple of years ago in buying Newfoundland Farm Products

from government. In fact, they were advertising the Corporation. I'm wondering

if there is anybody interested now or if the thing is still for sale.

MR. TULK: Again, I'm not going to get into the

details of it, because, as you understand, you don't do those things in public.

The twenty-two chicken producers, farmers, around the Province have an offer in

front of the government which we are discussing and which we will be meeting

next week to discuss with them again, while at the same time we move with that

board. There is that one. I'm not so sure you can put it down as an offer, but

there is one set of discussions ongoing that hopefully will lead to - and I

believe it is the best way for us to go. It may not be the only way, but it is

maybe the best way for us to go, as an integrated poultry industry, shall we say

from the cradle to the package.

There are some talks under way with those producers

at this present time and we will be continuing those next week. I think it is

some time next week that we are supposed to be sitting, next Thursday.

MR. FITZGERALD: Minister, I brought up the idea

a couple of weeks ago in the form of a question, as it relates to a vegetable

marketing board. Has that ever been considered by your department or has it been

tried? We have an egg marketing board, a milk marketing board and it gives our

producers some form of protection. I have spoken with local farmers in the area

and they have been very - well, in fact, it was their suggestion and their

thoughts that I brought forward. I am wondering if you are entertaining any such

MR. TULK: Let me say to you - and I will pass

it over to my officials to tell you what has been in the past there. Let me just

say to you that we are - I think we recognize, as well as anybody, that at

certain times of the year in the Province - I hesitate to use the word `dumping'

but there is dumping from certain parts of the mainland for certain products in

the Newfoundland marketplace in terms of certain kinds of vegetables. We are

open to any sort of discussion or suggestion from any group that might not - I

don't think I necessarily want to get into - and I think this is the word you

used the other day - the protection side of things, but maybe on the supply side

which is somewhat different. At least it carries a different connotation. If you

say you get into the supply side of things as opposed to the protection side,

but certainly we are open to sitting down and discussing with anybody how you

protect Newfoundland farmers. Are you - and how we helped make them more

competitive.

For example, I am told - and I have just started

discussing this this morning about 8:00 a.m. with Marty; I am told that last

year -and I could be completely wrong here because I do not have the full

details on it but there is a person in the Goulds, a Mr. Eric Williams, who last

year, I think, found that the Newfoundland turnip is very saleable in certain

parts of the mainland. Because of our climate, apparently our turnips turn out

to be a little bit better than from some other parts. Our cabbage is the same

way?

WITNESS: (Inaudible).

MR. TULK: Okay, all vegetables, he said, are

the same way. Now, it seems somewhat strange to me that we are unable to provide

the type of marketing - and I guess that's what you are talking about -the type

of marketing to make our farmers and our people competitive in this area. I am

going to stop but I just want to say to you that we are open to any sort of

discussion and I am open to discussion over the summer. There are a number of

people in this Legislature who have expertise, politicians who have expertise -

and I look at the Member for Humber Valley who has some expertise and possibly

yourself as well, coming from the area that you come from - who have some

expertise in the agricultural industry. I think, if you look at what I said and

what has been impressed upon me by my officials, that one of the areas in

government and one of the areas in this Province with economic development, that

has been the poor cousin, is the agricultural industry. I think we have to

explore all the possibilities and new ways of doing things. For example, I am

told by Rick Woodford that in the Cormack area there is a tremendous amount of -

and Rick you gave me the figures some time ago in Deer Lake sitting down over a

cup of coffee - of the amount of agricultural land that is available in the

Cormack area and yet the amount we are using is only a small fraction of it.

The Codroy Valley, for example, has been tied up, I

understand from my officials, by the way that we used to issue grants one time.

Well, I think we have to take a look at how we get that land back and how we get

that land into production. Next door to the land in Cormack is what? Limestone,

all the limestone that you need. It seems to me that if we make the right type

of effort - and I am not talking about throwing money at them, but if we make

the right type of effort, then we should be able to get that land back into

production and supply some of the much-needed employment. Because if you look at

the figures - and that is the reason why I passed them out to you, it is very

obvious that with a minimum amount of effort on the part of government - over

the past fifteen or twenty years there has been a tremendous increase in the

production value of many of the agricultural products.

So I am looking forward to this over the summer and

in the coming months. I don't know how much longer I will be in the party, you

never know these days, you may be flicked out of it. But I am looking forward to

the challenge of building with the members of the House a new trust in the

agriculture industry. And if I could, to finish off on this - while it is great

to talk about information technology and I think it is all-important, about

beautiful types of minerals, Voisey's Bay and all that kind of thing, I think

the kind of lasting improvements that we can make in this Province - and that is

my personal belief, now - is, in areas such as agriculture and forestry.

So, to come back to your question, I will ask Marty

if he wants to comment on the marketing side, whether it has ever been done

before.

MR. HOWLETT: There have been two attempts, Mr.

Fitzgerald, as you probably know, to establish a vegetable marketing board in

the Province and neither of these attempts, I guess, succeeded. In recent years,

I think probably three or four years ago, a group of vegetable producers got

together and formed a vegetable producers association which, I guess, has had

some success. I think what happened with the efforts on the marketing board side

for vegetables was, you had your commercial producers and then you had so many

numbers in the small operators that everybody had his production in August,

September and October and everyone tried to market his production in a three or

four-month period and that kind of I guess, really interfered with the

commercial production because, in a lot of those small operators, part-time or

hobby farmers, they probably drive school buses and teach school and some might

even be politicians and, you know, they are out marketing their product, and

marketing it below the price expected by commercial operators.

WITNESS: (Inaudible).

MR. HOWLETT: We do have, Sir, some politicians

and ex-politicians in the agriculture industry. So these were some of the

problems that the marketing board had in getting support for getting off the

ground. Now, as the minister said, if there are any new innovative ideas, we are

certainly open to look at it and to give some kind of support, maybe not in the

way of a marketing board, but in terms of the competitiveness factors and so

forth that could be introduced.

MR. FITZGERALD: The problem that has been put

forward to me is, and getting back to what the minister talked about, the

exporting -if you can call it exporting - between provinces of our turnips up to

Ontario. That was tried by several farmers I know in the area that I represent,

and they found: yes, it was a good product and yes, it was something that was

marketable, but there was no way that they could compete with the price in

Ontario and they found that it was not the market for them as much as they

wanted to get in there and regardless of the fact that the product they were

selling was good.

What they have referred to me is, the situation

where - and the consumer is no worst off at the end - when they market their own

vegetables, when the time of the year comes - and I am talking about root crops,

potatoes, carrots, turnips what have you - then you get the dumping of Prince

Edward Island vegetables, especially potatoes, here in Newfoundland. At the end

of the season when our Newfoundland growers have all their vegetables sold,

especially potatoes again, then you find out that in their season they cannot

compete with Prince Edward Island's potatoes but after, when their own

vegetables are sold, then up goes the price of PEI produce to, you know, fifteen

and twenty dollars a bag,

whereas now or a couple of months ago, you could

probably buy it for two dollars a bag for fifty pounds. And to me, this is

totally, totally unfair and I think very discouraging and it is probably going

end up driving a lot of our farmers who provide much-needed employment, out of

the business altogether. And that is what I am talking about when I refer to

protectionism or some kind of marketing board where we would not allow this to

happen or we would control the amount coming in here.

MR. HOWLETT: There is something different about

the vegetable industry. Even prior to the two attempts at setting up a marketing

board, there was an organization set up by the name of VMAL, Vegetable Marketing

Associates Limited, and they tried to co-ordinate all the production and

marketing of vegetables across the Province. It lasted probably a couple of

years. That didn't succeed either.

When I talk about putting producers in a position

to be competitive, maybe some of the things that we could look at, maybe have to

try to look at the types of infrastructure that is on farms for storing,

packaging and grading and the proper refrigeration and ventilation systems to

extend that marketing season to try to get them out of marketing in maybe

August, September, October and try to get them up into December, January or

February. Now, I know a lot of the farmers that have their dollars tied up

longer, but there may be some types of programs that could be looked at to, you

know, help them be competitive and get into the market at that time of the year.

Because, you are right, the prices do go up in the wintertime once it happens.

Another issue that might help, and I guess we will

have to wait and see the impact of the Freight Assistance Program having been

taken out now by the Federal Government. Because produce coming into the

Province must be able to qualify for some of that freight between provinces, and

not in provinces. So we will have to see how that one works out. That may put

our vegetable industry in a little more competitive situation.

MR. FITZGERALD: You mean that would qualify for

a freight subsidy, too?

MR. HOWLETT: No.

MR. FITZGERALD: A farmer on Prince Edward

Island shipping vegetables into Newfoundland would qualify for a freight

subsidy?

MR. HOWLETT: They used to under the Maritime

Freight Rate Assistance. They did get some assistance. Out in your area -

MR. FITZGERALD: It is not there now.

MR. HOWLETT: No, it is not there now. That is

the one the Federal Government has just gotten out of. So some of your farmers

out in the area can tell you about that one. Because they did complain to us

over the years about it, that it put them at a disadvantage.

AN HON. MEMBER: (Inaudible).

MR. HOWLETT: With some of these being taken out

by governments, I guess, that we refer to as subsidy, maybe some of it will be

to our benefit a little bit in the future.

MR. FITZGERALD: Well, that one certainly would

have been. It should not have been there in the first place.

Anyway, I will let someone else ask some questions

and come back afterwards.

CHAIR: The hon. the Member for Twillingate and

Fogo.

MR. G. REID: (Inaudible). You are talking about

the glut, basically, on the market in the fall of the year. A farmer in

Lethbridge, I don't know if that is in your district or close to it -

MR. FITZGERALD: Yes.

MR. G. REID: - said last year, if they had some

kind of an interest-free loan whereby they could hold their vegetables from say,

September until December when the price went up, they have a problem with paying

your employees in the meantime. If they had some kind of assistance where they

could get an interest-free loan so they could hold those vegetables, pay their

employees and then pay it back to whoever they got it from just after Christmas

when they started to sell their vegetables, they thought that would alleviate

the problem. I was just wondering if that would be available under E and L or

anything? I know under E and L right now you cannot get an interest-free loan,

but they thought that would solve their problem. Do you know what I am talking

about?

MR. TULK: I think you will find, as you know,

Mr. Reid, that it is becoming more and more difficult to put programs in place

for interest-free loans. I would not sit here this evening and tell you it is a

foregone conclusion that we would put forward that type of recommendation, or

that government would even accept it.

It is certainly something to be considered. As I

said to you earlier, I want over the summer and fall to put together a group of

people who will take a look at the - and make it up of not only bureaucrats but

politicians as well. Because those are the people who have to go back and answer

to their constituents at the end of four years, and who are ultimately

responsible for what happens in the Province. No offence intended to anybody

else. Over the summer I hope we can put together a group of people who will look

at some of the problems that we have in agriculture. Indeed, act as advisors to

Martin Howlett, Hal Stanley, and myself, or whoever happens to be in the

department. That might very well be one of things that we consider with regard

to vegetable farmer.

MR. G. REID: Yes.

MR. TULK: It is not something that is going to

be easy to come by.

MR. G. REID: No, I know. As for the other

thing, you mentioned about all this farmland around the Province not being used.

There were grants, up until last year or the year before, for clearing farmland,

but yet, as you said, in the Codroy Valley you have all this land that isn't

being used, and they probably got a grant to clear it in the first place.

MR. TULK: Rick, what happened in Cormack?

MR. WOODFORD: What happened with regards to the

land clearing, especially in Cormack - as you know, it started after the Second

World War. It was set up primarily for agriculture production. It is the only

place on the Island today that has a municipal plan based primarily on

agriculture, including all the cities, towns, and communities in the Province.

You can't build, for instance, you can't subdivide or anything like that,

without permission from the Department of Forest Resources and Agrifoods.

Anyway, the land was cleared over the years. They

were given, for instance, 50 acres, 60 acres, 100 acres. They had been given a

grant on 20 acres and the rest held in lieu. It is held in reserve and so on for

if you worked that 20 acres, your original 20 acres or 10 acres or whatever.

Some people worked it and then they got the remainder. Some people worked the

first part, some didn't work the first part and never did get the rest of it,

but always thought they owned it. I know I ran into it from 1975 to 1985 as

mayor of the community. People who never had title to their property always

though they owned it since 1945, because of the fact that they owned the first

20 acres, the grant on it, and held the rest in reserve, and figured they owned

it. Eventually, it came down to probably 25 per cent to 33 per cent of the total

of 33,000 square acres within the boundaries of the community itself that, you

know, you got your so much percentage that is bad, it is wet, no drainage, and

so on, it can't be utilized for agricultural purposes. The rest was tied up with

people who figured they had ownership and nobody else could touch it.

I must say, a lot of it is coming back today,

because a lot of it has been sold, a lot of title searches done on it, and so

on, and brought back to - either the original ownership but then sold, or else

taken back by the Crown and then bought by the farmer or leased out. So a lot of

that property itself now has been coming back. That is what happened in that

particular community.

MR. TULK: But that isn't true of Codroy Valley.

MR. WOODFORD: No, Codroy Valley is different.

Codroy Valley goes back further - oh, way back, Codroy Valley, and a lot of that

is absentee ownership, absentee altogether, out of the Province.

MR. TULK: I have asked our officials to - I

don't have it yet, I don't suppose I have. I asked Marty this morning to put

together for me how much land that we do know. I suspect that we don't know all

the land that is available for agriculture in the Province - but how much land

is available that we do know about in the Province, how much of it is being,

shall we say, used for agricultural purposes and so on. I hope to have that

information within the next little while. I think it is crucial that we get at

it and see what is there for us.

MR. G. REID: It isn't just (inaudible) Humber

Valley, it is the whole area from (inaudible) -

MR. TULK: Yes.

MR. G. REID: - (inaudible). I have a solution.

MR. TULK: Do you?

MR. G. REID: Use it or lose it.

MR. TULK: Oh, I agree.

MR. G. REID: I sounds pretty simple, but -

MR. TULK: I agree, use it or lose it.

MR. G. REID: I know it isn't as easy as it

sounds but something should certainly be done (inaudible).

MR. TULK: No, but that is the general

philosophy we should be using, use it or lose it.

MR. G. REID: I don't know why we continue to

give grants to people in the last few years to clear land - I think, Marty,

wasn't it, when there was land already cleared in the Province not being used.

MR. HOWLETT: We give them subsidies to clear

land, but we don't give them grants.

MR. G. REID: Well, used to.

MR. WOODFORD: One short comment. I don't want

to take time away from any other members. One of the mistakes the department

made in the past, and I've always argued against it, was if there was a

federal-provincial agreement - say, for argument's sake, for $300 - to give to a

farmer per acre to clear land, there was never anything - like I saw all kinds

of cases where, for instance, there was a 50-acre farm with 30 acres cleared,

down in cultivation, and you couldn't get a cent towards it. Say, for argument

sake, if one of us wanted to go in, if anybody wanted to go in and buy that farm

tomorrow, say it was $50,000 - me, on the other hand, they would give me a piece

of forest out of which to cut a farm. They would give me $300 an acre to clear

that, spend three or four years trying to clear it, put it down and put

limestone in it, reseed it and pick the rocks but yet they would not give John

Doe over here $300 towards the buying of an already cultivated farm which was

stupid. That's what happened to most of the farmland around today that is left

idle, to be honest with you.

MR. TULK: That's the point I was making, we had

an argument this evening over there, the same thing.

MR. HOWLETT: I will just comment on that Mr.

Woodford. Your statement is not quite correct because we did a couple of times

have programs for purchase of property. One year we had $6,000 but what happened

in the cost-shared - and you are right, these all came from cost-shared programs

but we had problems with getting our counterparts, the other government on side

in terms of being able to do these things at arms length and not having sons or

fathers selling to sons and vice-versa. We did have a couple of programs but it

certainly didn't go smoothly.

MR. WOODFORD: (Inaudible) area there is a lot

of land and it may still be bought. I don't know if you have it in the Budget

this year or not - but the land consolidation program and the acquiring of land

and leased it back to the farmer -

MR. HOWLETT: Yes, but we also did have a

program one time where you could qualify for a $6,000 grant to purchase land

based on so much per acre. There is money for land consolidation, yes.

MR. TULK: $300,000.

MR. WOODFORD: $300,000, yes.

MR. TULK: But I think most of that is

committed. (Inaudible) shall we say, new.

CHAIR: If everybody is in agreement, I would

suggest we take a fifteen-minute coffee break. Is everybody in agreement with

that? I don't hear anybody condemning the idea. Let's take fifteen minutes.

Recess

CHAIR: Order, please!

The hon. the Member for Grand Falls - Buchans.

MS THISTLE: Mr. Minister, as you know, I represent

a district which is at the heart of forestry country in Newfoundland and

Labrador, I suppose - maybe some others would argue that point. But for years we

have derived our living mainly from the forest in my district. In fact,

Abitibi-Price and before then, the A & D Company have been in business in the

Province since about 1905, 1909 and people all over my district; Millertown,

Badger, Grand Falls, Windsor and so on, we have derived our living mainly from

the forest and we have always had a higher than average per capita income from

the forest, almost the highest in Canada at times, I have heard. As you know,

the former town of Grand Falls was named the forestry capital of Canada in 1988.

During my term on the town council of Grand Falls - Windsor we had $20,000 left

over from that event and we wondered what use we would put it to so we could

have a permanent marker of being designated the forestry capital of Canada. So

we used that $20,000 to erect a concert bandstand and it is called the forestry

pavilion concert bandstand or stage. Many of my constituents are asking me, as

you are the new Minister of Forest Resources and Agrifoods, do you have any

responsibility or do you feel that some of the programs that are being carried

out now, mostly in St. John's and in Corner Brook could be moved out to Central

Newfoundland, specifically Grand Falls - Windsor since we are a central

location?

MR. TULK: I don't know whether it is fair to say

that we feel that any of the programs that are in St. John's could be moved to

Grand Falls - Windsor but I will say this to you that this year, as a result of

having to reduce the number of employees and particularly the number of people

at the management level - now, we did not do it all at the management level

either, some of it was as a result of laying off some of our management people

and some of our middle managers, and we ended up, of course, laying off

secretarial staff as well.

But as a result of that kind of exercise, a lot that

was being administered - there were three regions in the Province eastern,

central and on, the Island portion of the Province, shall I say; I hope Wally

Andersen is not around, he will hit me across the head - on the Island portion

of the Province there were three regions, there was the eastern, central and

western region. And you now have only got two regions administering many parts

of the Province and a lot of that is being done out of Central Newfoundland.

To be quite frank with you, over the summer we are

going to be, as a government, looking at many of the programs in various

departments, including mine. At this point in time, I am not in a position to

say where any of them will go or where the headquarters will be or what the end

result or the outlook of the department will be. But we will be looking. We

recognize that Grand Falls is key in the forest industry. It was called AND and

then it was called Price. Now, it is called Abitibi. Grand Falls has provided a

living for many of the people, not only in your district - I might say my family

made a living for many years with the old AND Company and the Price Group of

Companies. So we will be looking at over the summer and fall, a number of

program areas in forestry. And while we have no specific plans to move anything

at this point, I would invite you to make your representation to us, and we will

certainly give any consideration to what you give to us, to that kind of program

analysis, and as programs move, as things change in programs, locations may also

change.

I think it is safe to say that we want to be where the

action is and much of the action in forestry is in the Grand Falls area. So

please, over the summer, when we start our program review in this department,

make your views known to us.

Does that answer your question?

MS THISTLE: It does. I am pleased to hear you say

that, Mr. Minister, because as you know, the most recent announcement by

Abitibi-Price showing their commitment to the district, to Grand Falls/Windsor

and indeed to the whole Province, in view of the hard times that have faced the

pulp and paper industry over the past five or six years, they have renewed their

commitment. I believe the residents of my district, in particular, would like to

see more of a physical presence by forestry in the Grand Falls/Windsor region.

But thank you, and I will be following this in the upcoming months.

MR. TULK: I must say to you, this spring we had

some choices and we made choices that were not pleasant, and they never are

because in the final analysis, you end up telling people who had served the

department for twenty or twenty-five years that they have to leave, and that is

where it becomes unpleasant. But we had to make choices this year, for example,

in the area of nurseries, and the Wooddale Nursery, as you know, is in, it is

not in your district, but it borders - it is not in your district, is it?

MS THISTLE: Yes.

MR. TULK: Is it in your district? Okay. I was not

sure if it was in your district or in the District of Exploits. But we had to

make choices as to what we would do in that area. Consequently, we downsized, I

do not think we can say we closed, we did not close the Brookfield Road Nursery,

but we certainly downsized it to the point where now it is not carrying out the

functions that we had or either to do something with the Wooddale Nursery. I

think one of the things that came into play was the recognition that in the

Grand Falls area, the Windsor area, the Botwood area and all the areas in

Central Newfoundland, it was important to the industry that we should attempt to

keep as much going in Wooddale - as a consequence of that, we will be still

growing 7 million seedlings in the Wooddale facility that we have grown over the

past number of years.

We had to lay off a couple of people there, but we

will still do the job.

MS THISTLE: Mr. Minister, I noticed in your

opening comments you did mention the closure of the Brookfield Road Nursery, and

the Wooddale Nursery would be supplying the seedlings. I know our government is

committed to $10 million in silviculture for this year. Do you expect that with

Wooddale having to produce these extra seedlings, there will be some job

increases for Wooddale?

MR. TULK: No. I know what you are hoping, you are

hoping I will say yes, but I'm not going to be able to oblige you. A lot of the

silviculture work that we do will be commercial. It will be thinning,

precommercial thinning and commercial thinning and some plantation work, of

course, where we do planting. The Wooddale nursery will supply us with the same

number of seedlings that we produce there every other year. As I said, I know

you don't want to hear this, but we are going to have to do it with a few less

people than we have done it before. So no, the answer is there won't be any more

people. As a matter of fact, there will be fewer people employed at Wooddale

nurseries. Is that correct?

DR. NAZIR: The main thing is that Wooddale will be

the prime nursery.

MR. TULK: Wooddale will still be the prime nursery

for it, yes.

MS THISTLE: Very good. Thank you.

CHAIR: Thank you, Anna. Tom?

MR. OSBORNE: You mentioned that your -

MR. TULK: Moe has just told me that we - if I

could, Mr. Chairman, just add something to Anna's question about the importance

of - we closed offices in the Province but we kept the two open in -

DR. NAZIR: Millertown and Bishop's Falls.

MR. TULK: Millertown and Bishop's Falls. Because

we recognized that right there, there is an inordinate amount of activity in the

forest industry.

CHAIR: St. John's South - Tom Osborne.

MR. OSBORNE: You mentioned you are closing the

Brookfield Nursery. However, you are only showing a reduction in salaries of

$76,600. Why is that?

MR. TULK: Moe, do you want to answer that? You can

answer that right off without me -

DR. NAZIR: There are two permanent people there

and four seasonal, so the salary relates to that. Then there is some operating

money which buys the containers and other supplies. So the total cost of

producing the trees there was in the order of around $114,000, $115,000. The

rest of the money is in other areas, non-salary money.

MR. OSBORNE: Thank you. The second question I have

is about the Salmonier Nature Park. You have an overall budget reduction of

$40,500.

MR. TULK: Could you refer to the heading?

MR. OSBORNE: I'm sorry - 3.1.03 on page 146.

MR. TULK: The budgeted amount last year was

$319,500, the budgeted amount this year is $325,300, so there is an increase in

the budgeted amount. In terms of the revised amount I guess there is a decrease

of $40,500. I guess the explanation that is required here is why did we go from

a budgeted amount of $319,500 last year up to $365,800, and maybe what is

happening this year is that we have now given $325,300. So does that mean we

will be up to $375,000 or $380,000? I don't know. Moe, what is the explanation

for that? It is in Salaries.

DR. NAZIR: Last year we had one position

transferred into Salmonier Nature Park because we needed some additional work

done. One of the Wildlife conservation officers was moved in. Plus we ended up

doing some more work in terms of repairing the fences and the paths which were

damaged during a storm in winter, so we ended up hiring additional people to fix

that. That is why the revised figure is more than the budgeted. We ended up

transferring money from other areas. But if we go back to the budget, in fact

there is a slight increase and it is related to one position being moved in, but

there was some reduction (inaudible). So there is a balancing going on there.

MR. TULK: If I could, Mr. Chairman, just to add in

answer to that question. If you start at the bottom, Mr. Osborne, and you go -

let's look at the two budgeted amounts there, 1995-1996 and 1996-1997. If you

start at the bottom you see on both sides: $1,200, $10,800, $1,000, $51,000,

$6,300 and $500. The only difference that is in the two amounts is the amount

that has been budgeted for Salaries. As a matter of fact, there is an increase

in the budgeted amount and a decrease from what the revised says and I think Moe

was explaining that; it is in Salaries as opposed to other things. We have to do

more of that.

MR. OSBORNE: Okay, due to temporary positions.

MR. TULK: Yes. One thing that I might add, Mr.

Chairman, that I don't think we put into our notes, is, speaking of temporary

employees, there was a number of employees in the department who have been

temporary for years and years, even though they have been working with the

department for twenty to twenty-five years some of them, and government

undertook in its - I think it was before the budget actually - yes, it was,

wasn't it?

WITNESS: During the Budget.

MR. TULK: During the construction of the Budget,

the government undertook to turn all of those temporary employees into

permanent, anybody who had more than two years on a temporary basis. So there is

a substantial number of people in the Forestry Department and other departments

in government as well, who were temporary. And I think, and justifiably so, they

are now permanent employees and enjoy the same status as other people who have

worked with the department for some twenty years.

MR. OSBORNE: Okay. The next question I have is on

3.1.08 and that is on page 148 - Salmonid Enhancement.

MR. TULK: Yes.

MR. OSBORNE: There is an overall increase of

$916,100. I guess the greatest increase in this area is in the Grants and

Subsidies which is $734.100. Can you explain where that is being spent?

MR. TULK: Yes. I will let the other people get to

the specifics here. I will ask Moe, who is in charge of that area, to do it. We

are very encouraged, Mr. Osborne, with what is happening with the salmon

populations in the Province. There is a movement towards community-based

management, in other words, the communities around rivers, to start looking at

them, and some very good things are happening in that area. The counts are going

up on many of the rivers in the Province and I think we have to move rather

quickly to ensure that that resource is taken care of and used to perhaps create

some employment for people in the Province. So any increase that you see in that

area - but I will ask Moe and others to deal with the specifics and I am sure

they can - but as you know, it goes from $1.4 to $5.613 so I suspect it is

something left over from last year that is being paid out this year as a matter

of fact. But I think that program, which is cost-shared with the Federal

Government, ends this year anyway, doesn't it?

DR. NAZIR: Yes, this is the year.

MR. TULK: This is the final year. Moe may be able

to answer in detail, but I want to tell you that I think there is some great

work done in that area and I think the money that we have spent has been

well-spent and will bring many benefits to the Province in years to come,

employment benefits; but anyway, Moe can answer the specific question.

DR. NAZIR: As the minister indicated, this is a

cost-shared program and the amount you see here budgeted is the provincial part

of the cost-shared agreement. The federal

part is spent directly. There is a

management committee which decides which projects will be carried out in-house,

which will be contracted out with various development associations, government

management associations and so forth. So the amount of funding, whether it is in

Grants and Subsidies or in Purchased Services, depends according to how that

split of the Budget is. Some projects are done in-house, some projects are done

through various other agencies. So whatever money is left in the last year that

has been budgeted and to the best of our ability the budget is split up. If, for

example, some project does not go through a certain development association, the

money can be moved from, let us say Grants to something else, but the effort is

to try to spend the rest of the money this year.

Since last year, there was money left but they were

not that particular at that time to spend everything. For example, if some

development association or some management association could not conduct a

project, they did not replace it with another one, so it was carried forward.

That is why you see it was not exactly the total amount which was spent last

year. So this year we will attempt to spend it and if there is a small

carry-over, and some project does not get finished, that is a different story.

MR. OSBORNE: Okay. Now, I am a little curious to

see that the Salmon Enhancement Program is also mentioned in Tourism, Culture

and Recreation. There is a $36,000 salary allotment in that. Is there any

duplication of services here? And why would the salmon enhancement be budgeted

for into two different departments?

MR. TULK: Let me just say this to you, in terms of

tourism and anything that affects tourism will be dealt with by the Tourism

Department so it is probably in the outfitting. I don't know what the amount

would be in our budget for, but it probably has to do with the licensing of

tourism establishments or something to do with the tourist industry in regard to

salmon enhancement.

Moe, may be able to answer better than I can, so I

will pass it on. I don't know if you can or not, can you?

DR. NAZIR: There was one position which originally

was part of the - it was paid out of the salmon agreement. And when the inland

fisheries was with the Department of Fisheries and Agriculture that was the

arrangement. But since the inland fisheries management moved to the Department

of Natural Resources and now to the Department of Forest Resources and

Agrifoods, the arrangement was made that that position could be left there and

budgeted there and still it will be counted towards the provincial contribution

in the overall agreement. So there is no duplication there.

MR. OSBORNE: Okay. Thank you.

CHAIR: The Member for Humber Valley.

MR. WOODFORD: Thank you, Mr. Chairman.

Under the AACs for this year, Mr. Minister. Has there

been a reduction in the total AAC paper companies or has there been an increase?

I have been hearing that Kruger had a bit of an increase with regard to their

annual allowable cuts this year. Is that true or is it not?

DR. NAZIR: There has been a decrease in the case

of Kruger, not an increase as compared to the calculations five years ago.

MR. WOODFORD: So it has been a decrease this year

as compared to five years ago.

DR. NAZIR: That is correct.

MR. WOODFORD: Has that been approved for this

year?

DR. NAZIR: The total allowable cut has been

calculated and the company has been advised about those figures. They are

preparing the new operating plans on the basis of that revised figure. And those

operating plans, five-year plans, when they will be ready then the minister will

be approving those. But the operating plans are now being based on that revised

figure. That is the reason they are reducing their harvest, let us say, in the

Baie Verte area.

MR. WOODFORD: What was that last statement?

DR. NAZIR: They are reducing their harvest in the

Baie Verte area because they have to abide by a new reduced level of allowable

cut.

MR. WOODFORD: Was there any emphasis this year

when you looked at the annual allowable cut for both companies, Kruger and

Abitibi-Price, with regard to bug-killed and overmatured stands?

DR. NAZIR: Most of the budworm-killed or hemlock

looper-killed wood has been harvested. It was salvaged. A lot of it was on the

Baie Verte Peninsula. Part of it was on the Northern Peninsula. Most of those

areas have been harvested. There have been some areas which were lost because

there was no access to them, in the St. George's area. But they are so far gone

that it will not be feasible to harvest them. They are deteriorated to the point

that it will not be viable; they cannot be used. And there is plenty of

degeneration in some of those valleys, so it is not our intention to force the

industry to harvest those.

MR. WOODFORD: Some years ago now before they had

any so-called bud-picking program by forestry - is there any talk of that coming

back this year - the so-called bud-picking program that forestry used to have?

AN HON. MEMBER: What is he saying?

MR. TULK: The bud picking program.

MR. WOODFORD: You know, where they used to pick

the buds.

DR. NAZIR: Oh, cone-picking, you mean?

MR. WOODFORD: Yes, we call it the bud-picking

program. I don't want to get off that.

DR. NAZIR: Oh, I see.

MR. WOODFORD: We don't use the word `cone'. You

talk about ice cream out our way when you talk about that.

MR. TULK: You talk about what?

MR. WOODFORD: They think it is ice cream. So you

just talk about the bud.

MR. TULK: You wonder if it was chocolate or

vanilla. Anyway, go ahead. Is it chocolate buds or vanilla buds?

MR. WOODFORD: Soft-serve.

DR. NAZIR: Yes, you are right we had a large-

scale cone collection program from which we collect seed for our reforestation

program. A few years ago we had a good seed crop. We have some money from social

services available to create some jobs and we collected a lot of cones. In fact,

our bank has a lot of seed. We don't have a specific program for this year but

if in certain areas there is a need, what we do is, we collect the seed

according to various zones; so if, in certain zones, the seed is less, then we

will collect. But there is not a large scale program as we had a few years ago.

MR. WOODFORD: Are you using mostly spruce now, in

your cone-picking program?

DR. NAZIR: That's correct.

MR. WOODFORD: Pardon me?

DR. NAZIR: Black spruce, some white spruce.

MR. WOODFORD: A couple of questions on

agriculture. Your limestone program for this year, you say it is pretty well

ready to be signed. What is the tonnage you have allocated for this growing

season? Is it 5,000 to 5,500 tons, in that area? Is there a decrease or an

increase?

MR. HOWLETT: It is 5,500 tons of bulk and 250 tons

of bagged.

MR. WOODFORD: Now would the bagged come from

outside or are they going to bag it here?

MR. TULK: What?

MR. WOODFORD: Will the bagged limestone come from

outside as it did before or will it be bagged here?

MR. HOWLETT: In all likelihood it probably will

come from outside.

MR. TULK: I might say to you, Rick, that there has

been attempt by the department to drastically cut down on the amount of bagged

limestone that we are using - Is that correct? - and the trend is towards doing

away with bagged limestone. I noticed when we were going through the contracts,

the quantities, as compared to other years that it was used, is being reduced

substantially. I guess what I am saying is that most of the limestone now being

used is coming from inside the Province, although in a different form from

bagged. Again, that depends on what you get priced. It depends on the price that

comes in the tender.

MR. WOODFORD: Yes. The Farm Loan Board, last year

it was integrated - I think it was last year or the year before it was

integrated with ENL, fisheries and all of that. The Farm Loan Board - in fact,

over the years, history has shown that it has one of the highest repayment

schedules and records in the Province as it pertains to any lending institution

or any department, including fisheries, Enterprise Newfoundland and so on. This

year, has there been any thought - or any changes with regard to the loan

structure itself or with regard to the interest rate charged?

MR. TULK: To answer the first part of your

statement, the Farm Loan Board and The Fisheries Loan Board, as you know, went

with ENL and it is still part - it has now been transferred back to the

department of rural revitalization. I think the loans now - Marty, what are

they, 3 per cent above prime? Is that where they are running?

MR. HOWLETT: I think, but I'm not sure.

MR. TULK: I think it is 3 per cent. I will have to

check the figures for you. As a matter of fact, I don't believe there is

anything to be gained - or is it prime plus one? I am not sure, Mr. Woodford, I

will have to check it out. I did look at it earlier on this spring, and I know

my reaction to it was that in terms of the economic deal that you are getting,

there is not much to be gained from using the Farm Loan Board for farmers. It is

a discussion that we will have. There is a Cabinet committee, as you know, of

that department of rural revitalization. It is a discussion that we will be

having as to whether indeed the Farm Loan Board should stay with that department

or not. There are some discussions ongoing which I don't want to get into

because it is a Cabinet matter. But there are some discussions ongoing as to

whether the Farm Loan Board will be staying, or whether it will come back to the

Department of Forest Resources and Agrifoods. Because there are those of us who

see it as a tool that you use in the development of agriculture in the Province,

and it should perhaps be more readily available to the department that needs to

use it as opposed to some department that, shall we say, is secondary to the

agricultural industry itself.

So there is some discussion ongoing about that, but

the exact rate I would have to get to you. I know that when I looked at it, my

own opinion was that there is not much of a deal here.

MR. WOODFORD: Getting back to the question that

was brought up before me -

AN HON. MEMBER: (Inaudible).

MR. TULK: (Inaudible). I've had it, I have seen

it.

MR. WOODFORD: - that was brought up as it

pertained to Kruger getting away with this eight-centimetre versus

five-centimetre, Kruger versus Abitibi. Is there anything the department can do

there to sort of force Kruger to take that wood? If an individual is caught with

a three-inch top, I know exactly what happens, or a two-and-a-half inch top with

regards to the individual for domestic cutting or anything like that. They are

fined immediately. Why would Kruger be allowed to get away with that? Or is it

just (inaudible) over-matured stand?

MR. TULK: Can I just say this to you? As you said

to me just now, and as you have said in a number of places, there is a problem

brewing in the forest industry as far as the workers with Kruger is concerned,

and I guess as far as Kruger is concerned. We are having ongoing discussions

with Kruger at this point. I'm not in a position to tell you exactly where we

are, but believe you me, we are having some discussions with Kruger as to some

of the things that are happening in their woods operation on the West Coast.

Now, how much of it we can control is another

question. We will do our best to try to take care of the people who make a

living on the ground, shall we say, out of the forestry industry. But there is a

problem. There is a problem with the eight and five, but we are having

discussions with them on those issues, so look forward to something from us in

the next three to five days.

MR. WOODFORD: I'm hearing, and I don't know if

there is any truth to it or not, that the last agreement signed with the unions

with Kruger, they have an agreement for no new harvesters in the life of the

agreement. I'm wondering if the ongoing discussions with Kruger and

Abitibi-Price with regard to the short wood and long wood harvesters that both

companies have now, would that be included in it?

DR. NAZIR: As far as we are aware, the agreement

they have is it guarantees a number of weeks to the unionized workers. I think

it is eighteen weeks. That is predicated on a certain percentage of wood being

harvested by mechanized harvesters versus non-mechanized operations. There is

one of the reasons that Kruger are trying to streamline their operation in such

a way that they can utilize the existing harvesters economically, and at the

same time provide the eighteen work weeks they guaranteed in the union contract.

That is the most recent contract. It has the disadvantage of affecting the

non-unionized loggers who are not protected in this job stability and job

security, because the total amount of wood, what they need to harvest, is

approximately the same. The non-unionized wood harvesters are affected. But it

has been only a very recent agreement and it is good for three years, I believe.

MR. WOODFORD: Yes, that is right.

MR. TULK: I think the point is that we are in for

a great deal of upheaval in that whole area.

MR. WOODFORD: Yes. That is why I am bringing up

some of it, because I think that over the next little while there is going to be

some real problems -

MR. TULK: Yes.

MR. WOODFORD: - with regard to it. I mean, the

pricing system as well for union versus non-union, $39 per union versus probably

$23, $24 and as low as $22 for a jobber - that, to me, is ridiculous. I don't

know how it is going to be addressed. I know the companies are private and you

can't go out and tell them what to do and what not to do. The only thing the

government has control over, I suppose, is approving the annual allowable cut.

Other than that, I suppose they are on their own. But there is no doubt about

it, as far as I'm concerned, there are problems coming up in the industry.

MR. TULK: There is no doubt what you are saying is

quite correct and there are limitations that you have with the pulp and paper

industry. Most of the problems that we are having have come about I think in two

areas; it is in total allowable cut yes, the annual allowable cut, but it is

primarily in the area of the harvester and the amount of wood that the harvester

requires to be economical as opposed to having that much wood for people to cut

by other means. I can say to you that there is an ongoing dialogue between the

department and Kruger, and I am sure, as you said, that over the next two or

three weeks we are going to be hit with people really being upset because of

what is going on in the forest industry. And I guess you can expect nothing else

from them, because they are being displaced out of a livelihood that they have

come to enjoy primarily, I might add though, as a result of some surplus wood

being around, and surplus in the sense that it had to be salvaged, I should say

salvaged wood. But it is still there and the harvesters are replacing people on

the ground. So where it comes out nobody knows at this point.

MR. WOODFORD: Last fall, I had some talks with

Abitibi-Price regarding their short-wood harvesters versus ordinary, say,

chain-saw wood. They said then that they were going to include in their

negotiations with the unions, that if they could come down four to six dollars

per cord, that they would probably take some of the short wood harvesters out of

it.

Now my understanding is, that Abitibi has a contract

signed as well with the unions. Is there any indication that that happened.

MR. TULK: No, is there?

DR. NAZIR: I am not sure whether they have it in

the agreement or not, but we were advised by Abitibi-Price that they are moving

more towards more labour-intensive harvesting of wood as compared to mechanized

operations, so they are moving; whether they are moving with the agreement of

the union or on their own, they feel that they can get the wood more

economically by moving towards more labour-intensive techniques as compared to

Corner Brook which still believe that their mechanized operations are cheaper

than there non-mechanized wood harvesting. So the two companies seem to have

different philosophies; it also depends on what type of organization they have

in managing their mechanized versus non-mechanized operations.

MR. WOODFORD: It is hard to believe that you have

two paper companies in the Province, one with all kinds of wood and the other

with only two-and-a-half years supply left. And some of the things they are

doing - you'd think they would be on the same wavelength regarding mechanized -

because that is the one of the arguments that Kruger always used, that their

companies and mills in other parts of North America, were using mechanized

equipment up to as high as 58 per cent to 60 per cent and they were always 45

per cent to 52 per cent of mechanized use in order to keep their mills going.

But, at the same time, Abitibi-Price is looking to go the other way and come

back into a more labour-intensive woods operation than Kruger.

MR. TULK: Let me just read a paragraph from an

official in a letter to Dr. Nazir to emphasize what you are saying. It is the

last paragraph of the letter, and it says: ... since 1991, about 50 per cent of

our annual harvest has been mechanized. We require a minimum of 50 per cent

mechanization to maintain our fresh wood newspaper quality, better winter

utilization, wood cost and inventory control. We cannot - and this matches what

you are saying, about the kind of arguments that they use - ... we cannot

reverse this trend for a number of reasons but especially since almost all of

our competitors are up to 100 per cent mechanized and for the same reasons we

need to be mechanized.

CHAIR: Mr. Byrne, the MHA for Kilbride, has asked

if he could ask some questions here, he is not a member of the committee so he

asks leave. By leave?

AN HON. MEMBER: By leave.

CHAIR: Go ahead, Mr. Byrne.

MR. E. BYRNE: Thank you. I appreciate the

opportunity just to ask a few questions and should first of all, Mr. Howlett,

congratulate you on your return to Agriculture. I know it sends a positive note

throughout the community and I would like to articulate that publicly.

MR. TULK: (Inaudible).

MR. E. BYRNE: No, he is not, he is in the -

I just have a couple of questions; certainly just to

preface a couple of questions by saying if there is any department in

government, in my opinion, that has the potential for growth and to provide

employment, it is the Department of Forestry and Agrifoods, particularly in the

Agrifoods Branch. The food industry in the Province last year was about $1.5

billion, I think only about 10 per cent or 15 per cent of which we produced here

ourselves. But I will get into that in a second.

I would like to ask somebody about the Agriculture

Shows and Exhibitions, on page 156, in subhead 4.7.01. I know that the Food and

Livestock Show for the St. John's area has been cancelled altogether. I would

like to know the reasoning behind that. Also, what other shows is the department

still funding?

MR. TULK: Let me try to answer that for you.

MR. E. BYRNE: Based upon the heads you have

eliminated about $40,000. You have saved $40,000 there.

MR. TULK: Yes. Let me try to answer that for you.

I don't think the answer is going to be entirely satisfactory to you, to be

honest with you. But it was a matter of, not that the show is not considered to

be valuable. The St. John's Food and Livestock Show, to be quite frank with you,

has provided an education to many people in this area, including the kids who

visited it.

MR. E. BYRNE: A tremendous impact on the economy.

MR. TULK: Yes, a tremendous impact on what people

thought of agriculture in the area. As a matter of fact, I can say that for the

past three years I have made it a point to go to the agriculture show myself,

and I had very little connection with agriculture at the time, except for the

few potatoes I used to grow out in my own back garden. But it has had tremendous

potential. It had a tremendous impact. So the point is not that we cancelled it

because we thought it was useless. I will be quite frank with you, that was not

the case at all. But it boiled down, I guess, to having to find money somewhere.

That is what happened to the St. John's Food and Livestock Show.

I will say this to you, we have not completely at this

point given up on the St. John's Food and Livestock Show. We are looking at the

present time to seeing if indeed that can be perhaps done by somebody, shall we

say, in private business - although business perhaps is not the correct word to

use. We still have not given up on it. And in fact, the rest of the cuts that

are here in the budget will not affect the agricultural fairs and shows around

the rest of the Province.

MR. E. BYRNE: Looking at the Salary details, it

seems to me, all you really cut there is the Salary unit.

MR. TULK: Yes.

MR. E. BYRNE: What about the remainder of the

shows around the Province? Where is the remainder of the money being spent, the

$44,200?

MR. TULK: Let me just say to you that the real

cost of the St. John's Food and Livestock Show is not necessarily shown under

this subhead. I think Marty said something to me today to the effect that the

St. John's Food and Livestock Show in terms of overtime of our employees here in

the Avalon region may indeed have cost us well upwards of $200,000 to $250,000.

So this is perhaps not a real figure when you look at it in terms of what we are

going to save and what we have cut out as a result of cancelling the St. John's

Food and Livestock Show.

MR. E. BYRNE: No, the question is where is the

remainder of the $44,200 going to be spent?

MR. HOWLETT: With the Food and Livestock Show, I

guess like the minister said, it is not that it was not a good show. It came

down to having to make, I guess, some hard decisions. In agriculture when we

looked at having to come up with our share of the required savings, we have very

few programs that are not broadly based across the industry, like the limestone

program, the pasture program, the safety nets and so forth. So we never had a

lot of programs to cut, to take savings from.

The show was certainly a good benefit to