The Committee met at 9:00 a.m.

MR. CHAIRMAN (Smith): Order, please!

Today we are dealing with the Estimates for the Department of Fisheries, Food and Agriculture. I would like to welcome the minister and his staff. First of all, to the members of the Committee, we do have copies of the minutes of the last meeting and we would like to deal with these first of all. I have had a chance to examine them. There is one correction the Clerk has pointed out to me. Item 4 in the minutes there should indicate April 5, Elizabeth, instead of April 15. With that correction I would entertain a motion that the minutes be adopted as circulated.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Now I would like to ask the members of the Committee if they would introduce themselves, and then I will ask the minister to introduce his staff.

My name is Gerald Smith, I'm the Member for Port au Port and Chairman of the Committee. Just introduce yourself and your district.

MR. WILLIAM ANDERSEN III: William Andersen III, MHA for Torngat Mountains.

MR. WHELAN: Don Whelan, MHA for Harbour Main.

MR. W. MATTHEWS: Bill Matthews, MHA for Grand Bank, not a member of the Committee. Fisheries critic.

MR. E. BYRNE: Ed Byrne, MHA for Kilbride.

MR. CHAIRMAN: Thank you. Dr. Hulan, if you would introduce your staff.

DR. HULAN: Thank you, Mr. Chairman. On my right is Mr. Leslie Dean, the Deputy Minister for the Department of Fisheries, Food and Agriculture. On my left is Reg Kingsley, ADM for Fisheries and Aquaculture Development. To my far right in the rear is Dale Sudom, the ADM for Food and Agriculture. Next to him is Harold Murphy, ADM for Regional Services. Right behind me is Garland Mouland, Director of Administration, or administrative officer. Of course, you know who I am.

MR. CHAIRMAN: Thank you, Mr. Minister. I just point out that under the procedures you are permitted fifteen minutes for an opening statement if you so desire, after which time we will move right into the questioning. With that you may make your opening statement.

DR. HULAN: Mr. Chairman, and Committee members, it is with considerable pleasure that I present to this Committee the Budget Estimates of the Department of Fisheries, Food and Agriculture for the fiscal year of 1995-1996.

We are of course dealing today with the first budget of an entirely new department, a department which until a few short months ago existed only in the form of two distinct and unrelated entities within government. Under our new structure, through the marshalling and combining of resources and personnel, we can improve upon the level and quality of service provided the fishing, aquaculture, and agri-food industries and move more quickly towards achieving the objectives of the strategic economic renewal of this Province. Gross expenditures in 1995-1996 are projected to be $31.2 million. We will spend $26.1 million on current account and $5.1 million on capital account. We anticipate revenues of $3.9 million.

The fishery is fundamental to the way of life of Newfoundland and Labrador; seeking solutions which in part mitigate the collapse and closure of all major ground fisheries continued to be a major priority of my department. Since 1992 upward to 30,000 people have lost employment and had their standards of living substantially altered as a result of the various groundfish moratoria. This government is working with the federal Department of Fisheries and Oceans and the Department of Human Resource Development in responding to the income assistance and adjustment needs of fisherpersons and plant workers.

Despite closure of the most important groundfish fishery, 125,000 metric tons of sea fish were landed in 1994, having a landed value of $200 million and a product value estimated at $425 million. A significant number of fishers and processors are exploring and exploiting alternative opportunities in both the harvesting and processing sectors.

In 1994, some thirty-five to forty vessels took part in a developing scallop fishery on the Grand Banks employing in excess of 400 people directly, resulting in scallop landings worth $15 million. The skate fishery is also developing in response to initiatives by my department. In 1994, some thirty-three vessels landed 3,000 tons of skate with a product value of $2.2 million. A quota of 6,000 tons has been set for 1995 which we anticipate will be taken.

We are assisting the development of a sea urchin fishery which should land 300,000 pounds in 1994-'95 season. We believe a landed value of $3 million to $4 million is certainly attainable in the short term. A local company has established a state-of-the-art seal oil refining facility producing a high grade oil for human consumption. Ongoing efforts by food scientists and biochemists at Memorial University, are continuing with the work that I had underway at Memorial before entering the political arena, and they are clearly documenting the nutritional properties of seal meat and oil, as we move towards the promise of utilizing the full animal and a significant increase in the percentage of quota taken annually.

Approximately 20,000 tons of frozen, imported, groundfish were processed in 1994 generating approximately $10 million in processing labour income. In 1994, two large plants operated practically year round processing 13,000 tons of surf clams, a fishery developed in the past two years, again, largely due to the initiatives taken by my department. These and other initiatives will broaden the resource base of the industry.

The Department of Fisheries, Food and Agriculture in conjunction with other provincial agencies and federal agencies, and the industry itself, is developing a comprehensive strategy for the aquaculture sector. Newfoundland and Labrador have considerable potential with respect to aquaculture and we have every confidence that we can realize the potential of this industry. Indeed, when I became minister last August, I indicated to the department, the industry and the Province, that a chief focus of the new department would, indeed be, the development of the full potential of the aquaculture industry.

The Newfoundland aquaculture industry produced 835 tons of various seafood in 1994, valued at approximately $2 million which is more than ten times the production in 1989. When fully developed, the aquaculture industry will be a significant contributor to the provincial economy. The production of blue mussels doubled in 1994 and is expected to increase by an additional 400 tons in 1995. Tenders have been awarded for location of a scallop hatchery at the former fish processing plant at Belleoram. The hatchery will provide giant scallop seed on a consistent basis and remove the final impediment which has constrained development of the scallop aquaculture industry.

Earlier this year, it was announced that private investors had purchased the Province's share in S.C.B Fisheries at Bay d'Espoir. In six, short years, this government has created an environment whereby private entrepreneurs are willing to now invest in aquaculture endeavour in this Province and are indeed doing so. In accordance with the Province's strategic economic plan to improve government's services, the department has reorganized and upgraded its regional structure.

The five regions which correspond geographically to the ENL areas are each headed by a director-level position and are accountable for regional fisheries development planning in association with other regional economic plans and developments, and for the delivery of the department's programs on a regional basis.

The decision to integrate the leading programs of the two loan boards with ENL is consistent with the recommendations of the Province's Strategic Economic Plan. This initiative will improve the efficiency of government through the consolidation of all of its financial assistance programs within Enterprise Newfoundland and Labrador. Once integration is completed this initiative will also improve the quality of service provided to clients of the two loan board through the provision of assistance programs on a regional basis.

With respect to the Budget at hand, my department is providing $300,000 in 1995-1996 to Memorial University to fund a chair in fisheries conservation. Funding is also being provided by the Department of Fisheries and Oceans and the industry. An amount of $1.7 million is provided as the department's share of the provincial contribution to the Canada-Newfoundland Cooperation Agreement for Salmonid Enhancement and Conservation in 1995-1996. Cash flow was $4.6 million in 1994-1995 and is projected at $7 million in 1995-1996.

In October 1994 the federal government announced the formation of harvesting adjustment boards for the Province of Newfoundland. Since then a provincial appointee has been added to the board. The mandate of the board has been expanded so that it will now consider the issue of capacity realignment in the processing sector. The Province announced some time ago that it will not provide funding for the buy out of capacity in the processing sector.

We have also indicated to the federal government that its fiscal difficulties do not relieve it of the responsibility to deal with the economic consequences of its closure of the groundfish fisheries. The elimination of foreign overfishing off the Nose and Tail of the Grand Banks is prerequisite to the rebuilding of groundfish stocks off the Province's coast. The Premier, senior government officials and I continue to address this issue on a number of fronts at the local, national and international level. The most recent Canada-EU turbot dispute clearly demonstrates that effective measures must be taken immediately to conserve all fish stocks, not just turbot.

I want to turn to the other sector for which I am responsible and that is the agri-foods sector. The agricultural industry performed well in 1994. Total cash receipts were $62 million, a slight increase over the year before. Cash receipts are expected to reach $67 million in 1995. I must emphasize, however, that these figures represent only the unfarmed value of the agricultural industry. The figures reflect only the total of what farmers are paid for raw or semi-processed products. The actual annual value generated by the local agri-food industries is estimated to exceed $300 million. Approximately 3,500 jobs are directly attributed to the agricultural industry, with about another fifty employed in support industries such as feed suppliers, transporters, and manufacturing (inaudible) packaging material.

The food industry in Newfoundland and Labrador is worth around $1 billion to $1.5 billion in annual sales. A range of opportunities for the production and marketing of agri-foods and value-added products have been identified, some of which displace imports while others are ideally suited and available for export. Only yesterday I had a very large meeting on the West Coast of Newfoundland looking at this year the export of turnips from this Province.

My department supports the efforts of individuals and companies engaged in the value-added production of agri-foods. Earlier this year my department, in conjunction with the Newfoundland and Labrador Federation of Agriculture, the Economic Recovery Commission, Agriculture and Agri-Foods Canada, and the Eastern Community College, held secondary processing seminars in six locations across the Province. These seminars were aimed at increasing awareness of the opportunities in this area and identified the resources and expertise available to help people pursue business opportunities in the area of value added processing of agri-food products. Some $100,000 in Strategic Economic Plan funding is available in 1995-'96 to determine the market potential for such products.

On March 7, I announced the creation of a food division within the Department of Fisheries, Food and Agriculture to promote the Province's food industry. Dr. Hugh Whitney has been seconded from his position as Director of Animal Health for the Province to establish the new division. Doctor Whitney will review the existing structure of the food industry as well as consult with producers, processors, wholesalers, retailers and institutions that support the industry, such as government agencies, educational institutions and research facilities to determine their need and the role the department should take in assisting these sectors.

In June of last year the Province announced the establishment of a new provincial meat inspection program. Under the program, the responsibility for licensing slaughter facilities was transferred from the Department of Health to the Department of Fisheries, Food and Agriculture. As well, the program was expanded to give operators of abattoirs the option of having animals inspected. This is to ensure minimum slaughter standards and to provide opportunities for increased access to retail markets. At the end of 1994 there are a total of nineteen licensed abattoirs with five to ten other facilities being assessed for licensure right at the present time. While meat inspection is not compulsory at this time, five abattoirs are availing of the services of the inspectors.

The federal Minister of Finance, on February 27, 1995, announced that the Feed Freight Assistance program, or FFA, will be terminated as of October 1, 1995, although this has now been pushed back to December 31, 1995, much as a result of my own intervention. It will impact dramatically on the cost of production in the livestock industry in this Province. Prior to the announcement, subsidy rates for grain entering Newfoundland were between $46 and $57 per ton. The loss of this program is a very serious blow to the livestock industry in the Province. Industry and government are working together to pursue issues with the federal government to correct this problem. We are exploring other options that will lessen our dependency on western grain, one of which is the development of locally grown alternative feeds.

The production of grain would be a most important development for Newfoundland agricultural industry. Results of the last two years indicate that we can indeed grow grain with good yields and positive monetary returns. This past summer we have reached over 1.5 tons of oats and barley per acre, with a strong by-product of two tons per acre. Much more research work, however, must be done. Variety testing, fertility requirements, herbicide application and storage systems are but a few of the factors to be investigated. The Strategic Economic Plan funding in the amount of $200,000 has been allocated for alternative feeds testing in 1995-'96.

In 1994 government started a process that will hopefully lead to the privatization of Newfoundland Farm Products Corporation. At this time negotiations are ongoing with the Newfoundland Broiler Producers Association towards realizing this objective. As part of our privatization initiative we are taking steps to enhance the commercial viability of Newfoundland Farm Products Corporation. As announced in the budget, we have reduced the annual operating grant to the corporation by $1.5 million. Discussions are now under way with management and employee representatives on ways to achieve these reductions. The commercial viability of Newfoundland Farm Products Corporation must be enhanced. This is the key to the privatization of the corporation. In addition, there will be a reduction in the amount of subsidies paid to broiler producers.

An amount of $175,000 has been allocated towards the School Milk Program for 1995-1996. The amount represents an increase of $25,000 from 1994-1995, which I might add is a very worthwhile and successful program and one that I support fully.

In summary, then Mr. Chairman, my newly integrated department is faced with many new challenges relative to the economic development in our province. I am confident that we can meet these challenges and make a major contribution to the creation of new employment opportunities in fisheries, agriculture and agri-food sectors, especially in rural Newfoundland where unemployment is the highest.

Thank you for your attention gentlemen and I look forward to a productive debate on the estimates which I have tabled.

MR. SMITH: Thank you, Mr. Minister. Perhaps we should point at the beginning as well that during the question period if you defer to any of your officials we would ask that they please make sure that they identify themselves for purposes of the recording.

According to our procedures, the next session would be fifteen minutes allocated to the vice-chairman of the committee. In his absence and since we do have the fisheries critic here, by leave of the committee I suggest that we allow fifteen minutes to the fisheries critic to make a statement or pose any questions. By leave?

WITNESS: By leave.

MR. W. MATTHEWS: Thank you, I really didn't expect an opportunity to participate this way this morning to be very honest with you, so I don't have anything prepared. The minister alluded to the processing capacity reduction and I missed the point. Would you mind reiterating for me what you said on that particular issue?

DR. HULAN: Number one, there has been an initial appointee added to the Harvesting Adjustment Board and the mandate of that board had been expanded to consider the capacity realignment from the processing sector.

MR. W. MATTHEWS: You were specific in saying that the province would not participate financially in -

DR. HULAN: No, I also said that the province has already stated that it will not entertain a buy-out situation.

MR. W. MATTHEWS: For processors?

DR. HULAN: For processors. I might add Mr. Chairman, I forgot to mention this at the beginning, my deputy will have to leave at 10:30 because of a personal situation. So, he will be departing at 10:30.

MR. W. MATTHEWS: Mr. Chairman, with your permission, can I just ask questions back and forth?

MR. CHAIRMAN: Yes.

MR. W. MATTHEWS: Just in reference to the turbot dispute, or the overfishing on the nose and tail of the Banks. You made some reference to that, and the importance of dealing with it immediately. Is there any truth to the situation or can you comment that, something I read on Saturday, that they are looking at exempting the Spanish and Portuguese from arrest if suspected of illegal fishing? Is there any truth to that whatsoever? When I read it I said: it must be a mistake that can't be right, that you would look at exempting those two countries or vessels from enforcement action or arrest or whatever, if such is the case. Does the minister see that or is there any dialogue with the federal government that indicates that, because that to me would be absolutely ludicrous. Is that a fact?

DR. HULAN: My deputy who has spent some time in Brussels with the other officials from Ottawa, in ironing out the major points of a possible agreement, will make a comment on it.

MR. DEAN: Mr. Chairman, the issue raised by the honourable member is linked to the scope of the legislation which the government of Canada approved some time ago. The legislation basically provides for naming individual countries that would come under the umbrella of the legislation. In reference to the current negotiations, the issue that is being discussed is: What is the status of the legislation relative to the EU if there is an agreement negotiated with the EU?

Simply, what is proposed is that if in fact the EU is in full compliance the legislation itself would not be withdrawn, but as long as the EU is in full compliance with any agreement that is reached then the EU itself, or members of the EU, would be removed from the legislation. But that is only in the context of full compliance with any agreement that is reached.

MR. W. MATTHEWS: Are you saying then that - I mean, are they optimistic that Spain and Portugal are going to concur?

MR. DEAN: I would be extremely surprised, Mr. Chairman, if the Government of Canada would enter into an agreement unless there is full expectation that they would be in full compliance.

MR. W. MATTHEWS: Excuse me, Mr. Chairman. What has been the latest proposal with regards to sharing of the resource? You hear different figures bandied about. Could the Deputy Minister tell us what the latest figures are of the split of the stock?

MR. DEAN: Mr. Chairman, the details of the draft agreement have not been released by either party. What we have heard of course in the media is reference to certain sharing possibilities, but in very general terms Canada's objective clearly is to reach some reasonable sharing agreement where the interests of Canada are certainly not minimized, I mean relative to any sharing that would result from the agreement.

MR. W. MATTHEWS: Just a final question on that. Have there been any estimates or any intelligence reports on what the catch rates are of those Spanish vessels that are continuing to fish there? I know they have been under strict surveillance and monitoring. Has there been any idea just how much fish they've been taking out there?

MR. DEAN: Mr. Chairman, probably the best reference point for catch rates of individual vessels is that associated with the Estai itself. We understand that the daily catch rates at or about the time the vessel was arrested was somewhere in the order of 3.5 tons per day, which is not a large quantity of fish. But it is surprising that vessels would continue to fish at these levels. Certainly in terms of the overall catch to date it is certainly in excess of the position that the European Community and Spain have taken. They have estimated that the catch to date is somewhere around 5,000 to 6,000 to 7,000 tons. The minimum estimate by Canada probably is in the order of 10,000 to 11,000 tons at least.

MR. W. MATTHEWS: Mr. Chairman, if I could I would like to ask another question. With the transfer of most of the activities of the Fisheries Loan Board to Enterprise Newfoundland and Labrador, how has that transition gone? Are the activities now taken over completely by ENL as of this date, and is it functional? Has the transition gone fairly well, or where is it? Can you give us a status report on that?

DR. HULAN: I'm pleased to. The transition is proceeding in a proper and careful manner. Both loan boards; the Agriculture Development Loan Board and the Fisheries Loan Board are still housed in their former place. The individuals that have been dealing with the loans are still dealing with the clients. It is expected that by August of this year both loan boards will be moved to the ENL offices when space is available. Those individuals will continue as they have in the past, to deal with the clients on a normal basis and we see no difficulties whatsoever in the transition. So far we have had no problems, it will be monitored very carefully in view of the change that has taken place, to ensure that indeed no difficulties are created for the clients. So that is all I can tell you at this stage.

MR. W. MATTHEWS: Have staff levels been maintained? Those that were employed say with the Fisheries Loan Board will the staff levels be the same or will there be some staff fallout as a consequence of being taken over by ENL.

DR. HULAN: There will be a reduction in staff levels, I believe by approximately twelve.

MR. W. MATTHEWS: Twelve employees that were employed with the Fisheries Loan Board, there are twelve less now as a consequence of the -

DR. HULAN: And the Agriculture Development Loan Board, both loan boards.

MR. W. MATTHEWS: Twelve in total.

DR. HULAN: Total of twelve.

MR. W. MATTHEWS: How many from the Fisheries Loan Board. Can you tell us that?

DR. HULAN: In the Fisheries Loan Board, there will be ten. A reduction of ten and two from the Agriculture Development Loan Board.

MR. W. MATTHEWS: I think you put out a release or said something publicly about that, where some activities that were carried out by the loan board, something to do with the bounties or building or something.

DR. HULAN: Yes, the repair bounties will be retained by my department. That portion of the activity will be retained by the Department of Fisheries, Food and Agriculture.

MR. W. MATTHEWS: Thank you Minister for your answer. Mr. Minister, the ongoing process now of I guess the license buy-out program. I think that there has been 1,000 that have offered to sell-out their licenses and from public information given a week or so ago by Mr. Cashin, it said the range was somewhere between $100,000 and $300,000, it looked like that would be the pay-out somewhere between $100,000 and $300,000 for approximately 1000 fisherman.

I asked you this question in the House before, looking at the possible implications for people who owed money to the Fisheries Loan Board. Has there been any further consideration given to that? At the time you said that any fisherman who had made a reasonable effort, I guess over the years to pay their bills to the loan board and so on, that they probably would not be touched. Has there been any further consideration or discussion with the federal department on that or with the federal government. Will someone who has kept their debts up to date receive the total amount of whatever the final pay-out is or indeed will the loan board require moneys towards the debt payments of fisherman?

DR. HULAN: In responding in the house, I probably expressed my own personal view very much in the fact that I'm a great believer that those who made a concerted effort to do what they could, do the best they could to keep their loan payments up to date as much as possible, be given every possible consideration with regard to the final dispensation of their loans.

We will deal with every individual - and I think I indicated this in the House to you - each one will be considered on its own merit. There is no question about it. Keeping in mind my own philosophy to be very helpful to those individuals who made an effort.

MR. W. MATTHEWS: Really what you are saying is government really hasn't made a decision?

DR. HULAN: The only decision that has been made within the department is that each will be considered on its own merit.

MR. W. MATTHEWS: Anyone who has been delinquent, then they can expect that payments from the federal government to them for a licence buy out will be intercepted by the provincial government. Is that basically what you are saying?

DR. HULAN: I will put it this way. We have to be fair to all, and those individuals who bust their behind to try to make some money somewhere to pay their loans through the years indeed I believe, and I think you would as well agree, that these individuals should be given, in fairness, more of a consideration than those who said to hell with it over the years, and let government pay their interest and so on.

MR. W. MATTHEWS: From a district point of view, I'm wondering if your officials could inform me or someone, perhaps - I know yourself - I know you were down in the Grand Bank area a couple of months ago. I'm wondering if you could tell us or give us an update on the activities of the surf clam operation in Grand Bank, where that is going, where it is gone, and what your department's impression of that has been.

From my own point it seems like it has done reasonably well under the circumstances. I'm just wondering if you or one of your officials could sort of update the members. As I said to a number of them, the news media, that like last year we had two in my view very positive stories in my area, in Grand Bank and Fortune, where Fortune had one of the best years, perhaps the best year in ten or twelve years, in the processing of Russian cod. Then we had the surf clam operation in Grand Bank. I'm just wondering if you could tell us what the situation is there. I understand now that they are gearing up now to do some skate wing production at Grand Bank as well, in addition to the surf clam operation. We know the impact the Canada-France dispute has had on scallops. It has really, I guess, changed the whole focus down there, because the Clearwater operation was basically set up, for the most part, for scallops. Then the Canada-France dispute of course interrupted that. Now there is very little scallop production and really little scallop. If they buy it now it comes in in meat form, so they are not doing any processing at the plant which is geared up and there is a substantial amount of equipment to do so. I'm wondering if one of your officials could tell us really what is happening there.

DR. HULAN: I will respond to that, and maybe one of the officials will add more to what I will have to say. As I indicated in my opening remarks, the surf clam development was a very positive development in the fishery in 1994-1995. We see it as having some further positive developments this year with increases in harvesting. We will be meeting with Clearwater on May 2 to discuss the whole issue of the surf clam fishery and where we are going in 1995-1996. Mr. Dean, go ahead.

MR. DEAN: Mr. Chairman, the Grand Bank operation, I guess in the context of what has happened relative to the collapse of the groundfish sector, is certainly one of the brighter spots in the industry. Especially in terms of those plants that were previously dependent on the offshore sector.

The surf plant operation is a very, very lucrative fishery, centred at Arnold's Cove and at Grand Bank and with a relatively equal sharing of the resource. The market is very, very firm. In fact, I spoke to the manager of the plant on Friday and he informed me that there is a delegation of twelve Japanese buyers who will be coming to Grand Bank later in April, so that sector of the operation is going along quite well. In terms of the scallops, of course, Canada did, in the final agreement with France, secure about 30 per cent of the scallop resource and this will have another, you know, further impact, a positive impact on the two operations at Grand Bank.

In terms of the Fortune operation, as the member probably is aware, Fishery Products International made the corporate decision this year, well really it was a decision that was made last year and implemented this year, to consolidate their operations at Marystown in the 1995 season and there is, as you know, some level of foreign processing activity in terms of Barents Sea cod taking place so, all in all, you know the Grand Bank operation I guess, is a clear example of what can be done, not only in terms of capitalizing on a new species but in terms of the further processing that is associated with the operations down there.

MR. W. MATTHEWS: Mr. Chairman, I would like to thank the committee for allotting me this time and I would just like to finish with your permission, this one question. Perhaps the Deputy Minister could continue again on the scallop situation. I have to ask the question, really, where is? There still seems to be some details to be worked out in negotiations between Canada and France, as I sort of sense now, I am really not sure, there still seems to be some problem with the settling of that, and fishermen are really not sure if they can fish or when they are going to be able to fish or catch their 30 per cent, and I am just wondering, really, where that is, because I know they are gearing up down there now again and I run into fishermen who ask me the question, so there still seems to be some problems that are not yet sorted out in those negotiations. Could the Deputy Minister update us on that please?

MR. DEAN: I am not aware of any major problems. The sharing agreement has been agreed upon, if there are any outstanding issues that have to be resolved, it may be in the conduct of the fishery itself within the French zone, and I am sure that is just a matter of detail that shouldn't pose any major problems.

MR. W. MATTHEWS: Thank you.

MR. CHAIRMAN: Mr. Andersen.

MR. WILLIAM ANDERSEN III: Thank you, Mr. Chairman.

MR. CHAIRMAN: By the way, one second. I would point out as well, each member of the committee now will have ten minutes each and I will ask that if you wish to question, that you attract my attention so that I could make sure you are included in this.

MR. WILLIAM ANDERSEN III: Thank you, Mr. Chairman.

I have several questions here in relation to Labrador.

2.2.01 to 2.1.03, in the Estimates. I would like an explanation of what the differences are between the Marine Service Centre and General Marine Facilities. Two of the sections come under the Labrador Development Agreement and the other one, under the Labrador fish plants. Why are they separated?

DR. HULAN: I think in this case here, one is a cost-shared agreement and the other is not. Is that right Harold?

MR. H. MURPHY: The Labrador (inaudible) is for the operation of the plants in Makkovik and Nain. It is under the subsidies and the operations. 2.1.05 is the Labrador Agreement. It covers programs and various aspects of research and development and these type of programs, so they are two separate programs. 2.1.01 is the marine service centres and that covers the cost of running the marine service centres on a Province-wide basis, including Labrador. It is a block funding for the whole Province. 2.1.03 is general marine facilities which is for repair facilities, and again it covers the Province but internally it is broken down on a regional basis.

MR. ANDERSEN: You say there is block funding for the operation of marine service centres. Why is the department saying that they will no longer subsidize the operation of the marine service centres? Secondly, what percentage of the block funding will go to the service centres? I know that in Makkovik, for example, the only operator they have to lift boats in and off the service centre is a volunteer. There is no employee there, so what kind of financial services does the centre get outside of being put there?

DR. HULAN: Number one, we continue to fund the service centres but what we are also doing, we are making every effort to privatize more of these centres right across the Province, and around the Province. The funding is still there for marine service centres but it is just that we are encouraging more and more to go into private hands.

MR. ANDERSEN: Thank you.

In relation to the Labrador fish plants I understood a couple of weeks ago that there would no longer be any subsidies for the operation of these plants, so what is the huge budget for the Labrador fish plants if there is not going to be any operational subsidies? Where are you spending $584,000 on Labrador fish plants if you are not going to be involved in the operation of them?

DR. HULAN: The department though, is still providing in the Budget for the losses of those two plants that are ongoing. Those losses are still being provided and picked up by the department. I might add that in the case of Makkovik we have an agreement with Torngat Fisheries to underwrite a major portion of the losses that are incurred.

MR. ANDERSEN: I find that difficult to swallow because on the one hand Torngat fish producers were reporting record revenues, and if they can report record revenues on the one hand and the Province has to underwrite their losses on the other hand where is the money going or coming from?

DR. HULAN: The losses that I am referring to reference to the plant itself and not Torngat fisheries, so that is still being underwritten by my department.

AN HON. MEMBER: Part of it.

DR. HULAN: Part of it, yes.

MR. WILLIAM ANDERSEN III: One question with respect to the turbot fishery off Makkovik, last year the plant workers in Makkovik who were brought in from Postville, Rigolet and Hopedale, I believe two of the sixty or so plant workers, or three, qualified for their U.I. benefits, and yet the Province allowed approximately 85 per cent of the total catch from the Makkovik area to be shipped off to the Island for processing. What is going to be the position this year?

The other thing, too, with respect to that, is the Mayor of Makkovik, for example, worked there as an observer and said a large portion of the turbot were jelled - and small, less than twelve inches, a lot of them. Does that mean our own fishermen are abusing the turbot fishery as well? If so, what are we doing about it?

DR. HULAN: I must say, I was not aware that the majority of the turbot that was harvested up there was less than twelve inches in length, but as far as the arrangement with Beothuck Fisheries, that arrangement was a 50/50 sharing. Now I am not sure where the 85 per cent figure came from.

MR. WILLIAM ANDERSEN III: The 85 per cent figure comes from the fact that there is, off Makkovik, a TAC as well, and of the TAC about 15 per cent goes to Labrador from the Makkovik, Hopedale, Channel area.

AN HON. MEMBER: (Inaudible).

DR. HULAN: As the deputy has indicated, we have no control over what happens outside. The control starts on the landed catch.

MR. WILLIAM ANDERSEN III: Mr. Chairman, I respect that answer but I think on the other hand we have a long history of a fishing industry in the area, and I think there should be a greater commitment on the part of us, the politicians, especially in government, to push the federal government to allow that area to have a greater opportunity for that resource than they have in the past number of years.

DR. HULAN: Maybe I could just make one final comment with regard to Mr. Andersen's last question.

The department has in the past made a representation for additional quota in addition to what the region now has, so that is, because of the need to provide work in these plants up there, we are fully cognisant of it, but I am also reminded of the fact that last year we had to scrounge around to find a part of the fishing industry that was willing to go up there and harvest these fish. It is not an easy situation, and I appreciate it.

You also asked back before: What is the situation going to be this coming year? At this point I would say that the status quo will remain, and we will continue to prohibit the trans-shipment of major lots from the Labrador area in order to provide fish for the operation of these fish plants.

MR. CHAIRMAN: Thank you Minister. Mr. Byrne.

MR. E. BYRNE: Thank you, Mr. Chairman. A question for the minister dealing with the Newfoundland Farm Products. You alluded to in your opening remarks about the discussions under way and continuing with Farm Products. At what stage are we with that? There is obviously a huge reduction in the budget and subsidy due Farm Products this year. Some have accused you, or the department not necessarily you, but you as the minister, that the Corner Brook operation may shut down as an operation, that government actually was just getting the Farm Products lean and mean and more presentable for the private sector.

The first question is where are we in terms of discussions with Farm Products and the privatization initiative? Secondly, would you comment on what impact the reduction in the amount of monies allocated to Farm Products will have on the operation in the province, particularly on the West Coast?

DR. HULAN: Thank you, Mr. Byrne. To answer the first part of the question, a call went out for proposals. There were two proposals that came in, one only that had any significance to it and that was from the Broiler Producers Association of Newfoundland and there proposal was sound. However, a number of things have happened since the proposal was submitted. Number one, as a result of the North American Free Trade Agreement and the removal of tariffs, the bottom fell out of the chicken market in Ontario and that changed the whole picture with regard to their proposal. They have since then put together a revised proposal that is very, very, very strong, very sound and I would say it's the step that will provide for a very efficient and sound poultry industry in the years to come if the final dispensation of Newfoundland Farm Products is through the private sector and specifically to the Broiler Producers Association.

The other thing I would have to say is that we did not reduce the budget of Newfoundland Farm Products by $1.5 million. What Newfoundland Farm Products Corporation was directed to do was cut their losses - there is a big difference - cut their losses by $1.5 million. How they achieve reducing those losses by $4.5 million is something else. I don't know if you are aware, but this past year the losses on the two processing plants was in the order of $4.4 million I believe, $4.2 million. The total cost of the chicken industry in the province is $7.4 million when you throw in the chicken subsidies. But the Newfoundland Farm Products Corporation has been directed to reduce their losses by $1.5 million. Therefore, negotiations are now under way and in fact the forth meeting will be held today with the employee representatives and my department and treasury board as to how they are going to proceed to reduce those losses by $1.5 million.

I realize that some of the media have said that the Newfoundland Farm Products plant in Corner Brook may close. That may indeed be the recommendation of this committee, but at this stage, I would have to say that this has not been a conclusion at this stage in the game, it may be, as they finally proceed with these discussions. I can also say that three separate detailed studies in the past of the Newfoundland Farm Products Corporation indicated that if they were going to survive and if they were going to reduce their losses and wipe their losses out completely, that could only be done by processing all birds in the Province at one location. I'm not saying where that location would be, but obviously economics will come into play there. I can go on in great detail on this one but I won't at this stage. I will leave it for another question.

MR. E. BYRNE: Sure. With respect to the Farm Development Loan Board, where the administration I guess has effectively been moved to Enterprise Newfoundland and Labrador, have you received much commentary or any advice or any concern noted by those in the industry who partake of the service provided by the Farm Loan Board, that they may have raised any concern at any point with yourself or any of your officials about this move?

DR. HULAN: Okay. I can speak from the minister's point of view. As you know, right at this particular time in the life of the agricultural year all of the annual meetings are taking place. I have spoken to the Egg Producers Association (inaudible), Newfoundland and Labrador Federation of Agriculture, the Milk Marketing Board and so on. I have not had any negative comment made to me, no comment at all.

MR. E. BYRNE: Were comments or was the advice of industry sought before such a move took place? Or was it a decision made wholly within the department? Because the reason I ask the question is that if it was a move that was not suspected to be coming down from those who are involved in the industry directly in whatever capacity, or whatever shape or form, then it may be something they are only becoming aware of since the Budget was released, and not necessarily sure what the impact is going to be upon them.

DR. HULAN: The decision was made in the budgetary process and as such it was handled in the development of the budgetary matters for 1995-1996. Personally, being fairly close to the agricultural industry, I see no detrimental effect in this move whatsoever. Having said that, as I have assured the industry and it will be done, we will monitor the situation very closely. Because as I said in my opening statement, the move to integrating those two loan boards into ENL was done for efficiency and improvement of the service to the client. That is what will be monitored. Let that not be questioned. That will be very closely monitored.

MR. E. BYRNE: As you know, there is a base of an agricultural industry in my district. Discussions that I've had with some of the farmers in the area, they've wondered why such a move, taking it out. I guess it is probably more of a concern based upon what ifs then actually what will transpire, because we don't know yet of course. I will just note for the record some of them. That such a move, going to Enterprise Newfoundland and Labrador, taking it out of a department where officials would have a sensitivity and a knowledge of the industry, obviously, and putting it into the hands of another administrative division that may have no awareness and no understanding, in the specific sense, of what the Farm Development Loan Board was about and has done. There is just a concern there. I think wherever you get the opportunity as minister or as officials to highlight that the service to the client, it will be tantamount in what you are monitoring, I think that you should do it.

DR. HULAN: Yes, you've made a very good point Ed, and these were some of the things that were in my own mind as we proceeded with the budgetary process, I will tell you that much.

I will also say that the programs are all the same, the programs are there. The initial contact in the loan procedure for the Newfoundland Development Loan Board is still the agriculture representative. His recommendation, his contact and involvement with the client, are still going to be there as strong as ever, and his recommendation is still a major part in the whole process of whether a loan is going to be looked at favourably or not. Because the agricultural representative is on site working with the individual. That is going to stay the same.

The individuals at ENL who will then receive the loan will be the same individuals who received the loans now over at Brookfield Road office. Also, the final review committee of loans within ENL will have agricultural expertise individuals placed on the committee for the final analysis.

MR. E. BYRNE: Final question, more dealing with the federal Budget recently announced and I guess ongoing discussions between the federal department and the initiatives that are jointly funded or fully funded by the federal government. What impact do you see - down sizing, for lack of a better term at the moment, in terms of the federal government's Budget recently announced? What impact will it have on the agricultural industry? Are we looking at major reductions in terms of what the federal government has traditionally funded, specifically in the department of agriculture? If there is some analysis being done, what role do you see the Province eventually taking in some of these areas? I know it is a general question, and it is meant to be, but....

DR. HULAN: I will just respond to it. There is a negative impact as a result of the removal of feed freight assistance on the animal industries of this Province. Roughly an increase in their production costs of about 12 per cent, maybe even as high as 15 per cent in the short term, until we are put in a position to be able to respond to that in a more positive way. That is a negative effect.

We have also the removal of the Atlantic freight subsidies program, which will probably more than likely - in fact, I had a big meeting on the West Coast Sunday afternoon with the agricultural industry. It will probably have somewhat of a positive effect on the vegetable industry, because it also will reduce the subsidies of vegetables coming into this Province, or should. The analysis that was done by my department before this actually became effective identified and suggested in their final analysis that it may have a positive effect on the vegetable industry, which is very important. Because if there is anything we have a tremendous potential for development in in this Province with few government inputs required, that is the development of our vegetable industry.

Vegetable producers on the West Coast of Newfoundland now are looking very seriously at developing a secondary processing facility out there. One has already started, and that is what the meeting was on yesterday, to look at the full development of a secondary processing facility for vegetables. If we can get to that stage then the industry is going to basically be taking off in the right direction.

MR. E. BYRNE: I would suggest we probably have to get to that stage.

DR. HULAN: Absolutely.

MR. E. BYRNE: If we don't the type of industry we will have will be very minimal -

DR. HULAN: Yes.

MR. E. BYRNE: - in terms of the impact of NAFTA and in terms of the global setting that we find ourselves in. We really have no choice but to move in that direction.

DR. HULAN: There is no question. Of course, that is what the task force report on agri-foods recommended six years ago, and it is certainly starting to gather some momentum.

MR. E. BYRNE: One final quick question, if I could.

MR. CHAIRMAN: Mr. Byrne, your time is up, unless you are going to conclude your questioning now.

MR. E. BYRNE: Yes, it is just a quick question.

MR. CHAIRMAN: Okay.

MR. E. BYRNE: As the chairman of the task force on agri-foods and now as the minister who is responsible for its overall implementation, would it be fair to say that probably one of your priorities is to implement as many of those recommendations that you made as an independent chairperson of the actual writing of the document? It's an opened ended question, it's not meant to sidetrack you or anything. It's trying to gain an understanding of where you are headed with that report because there are many good recommendations that should be implemented that are not at this time.

DR. HULAN: I don't mind answering that and the quick answer is yes.

MR. E. BYRNE: Fair enough.

MR. CHAIRMAN: Excuse me Mr. Whelan, I neglected earlier to recognize that two of the members of the committee have arrived since we started our proceedings. So, I would ask them now just for the records if they would introduce themselves beginning with Mr. Penney.

MR. PENNEY: Melvin Penney, MHA for Lewisporte.

MR. SHELLEY: Paul Shelley, MHA for Baie Verte-White Bay.

MR. CHAIRMAN: Thank you, okay Mr. Whelan.

MR. WHELAN: You mentioned earlier about your meeting on the West Coast with regard to the exporting of turnip. You mentioned a few minutes ago as well, the development of secondary industry. I would assume that the root crop that you mentioned would have to go through some sort of a process before it was exported. Has there been a change in the federal government policy of exporting root crops from the province?

DR. HULAN: We have always had the opportunity in this province since 1949 to export root crops from this province. Just that there has to be certain steps followed: number one the area that the product is harvested from must be disease free, identified and cleared as a disease free area, with particular emphasis on the potato canker and that can be easily done. We know already the areas in this province that are free of potato wort disease. Once the vegetable, say it's potato or turnip, is harvested, it has to be washed and sealed in a package for export. It's not to be opened again until it reaches the consignee. So, in other words it's sealed in a proper bag or other container and loaded on some transport facility and transported to the assignee. So, there are four different criteria that you have to meet. You can export root crops no problem whatsoever.

MR. WHELAN: The provincial government owned a number of fish plants in the province. Have any or all of those been liquidated, have they been sold or leased? What is the status on them?

DR. HULAN: No, all of them have not been released or taken out of our system, but if I remember correctly along with the many other things, I believe there is something like five plants still within our inventory, but I am going to ask the ADM, Mr. Murphy, to answer.

MR. MURPHY: In total, I think there are about fourteen around the province, but these are only smaller plants. The major plants like in Rose Blanche and St. Lawrence, freezing plants, there is approximately five around the province at the moment.

MR. WHELAN: What are your immediate plans for those plants? I suppose what I am getting at is you mentioned the agri-foods industry. These plants, we call them fish plants but I suppose in essence they are food plants, they are approved by federal health officials as buildings that are acceptable and meet all the criteria to process food. Have there been any consideration given to encouraging associations or individuals who -

DR. HULAN: Yes. That's a good question and I can tell you there is. Number one, I am very pleased to hear you say food plants because they are indeed just exactly that, food processing plants. We have released one of those food processing plants - and I use the term food processing plants - up in New Perlican that is now being used as an abattoir for the slaughtering of hogs and for the further processing of hog products, going very, very, very well.

We have also made arrangements on the Northern Peninsula with regard to the potential of a group of individuals who are interested in turkey production, to release one of those plants for the slaughtering and processing of turkey products. We have another plant here - Indian Bay Frozen Foods - where is that plant located, that's involved with blueberry processing?

WITNESS: (Inaudible).

DR. HULAN: It is in Indian Bay yes, where they are in the process of primary and secondary processing of blueberries, so -

WITNESS: (Inaudible).

DR. HULAN: Yes, that was Parsons Pond up in the Northern Peninsula for the turkey processing I mentioned earlier. So we are encouraging that. We have a fantastic thing in Belleoram with the conversion of an existing fish plant into a scallop hatchery, so each case, proposals on every individual plant that might come forward is considered again on its own merit and certainly we are encouraging the use of these plants to their fullest as food processing plants.

WITNESS: (Inaudible).

DR. HULAN: Yes, and working with their various community-based organizations to achieve that goal.

MR. WHELAN: So a number of these plants have gone to associations as well? Is it strictly private individuals and private companies who have these places?

DR. HULAN: Private individuals, private companies primarily

MR. WHELAN: It is all private?

DR. HULAN: Right, yes.

MR. WHELAN: With regard to the Green Plan, I notice the federal government, with regard to administration, kicked in something to the tune of $75,000. Okay, 6.1.03, Green Plan Administration, $75,000 total allotment under that. So that's federal government money being used or passed to the Province to administer the Green Plan.

DR. HULAN: Yes, that's right but I think I will let the expert ADM for Food and Agriculture, Dale Sudom, speak to that.

MR. SUDOM: The Green Plan Administration funds are for current account funding for the Green Plan, and those are the types of grants and subsidies that go out to various proponents in terms of projects that they submit to the Green Plan. You will see on the next page the capital account for the Green Plan and those are capital activities under the Green Plan, and so the funding is broken down between current and capital account items for that particular plan, and these, of course, are all funding to increase the environmental sustainability of the agricultural industry.

MR. WHELAN: I wonder, Mr. Sudom or Mr. Minister, could you expound to some degree on the Green Plan itself? I know we have the environmental sustainability of agriculture; what exactly does that mean? Could you go into that in a little bit more detail? There are grants and subsidies there to the tune of $400,000. Who would these grants and subsidies be going to?

DR. HULAN: Again, I will answer, or maybe I should let Mr. Sudom answer it in more detail, but I believe under the Green Plan a number of projects were funded with regard to the manure facilities and manure handling which is an issue that we have to be very careful with because of environmental impact but, having said that, I am not familiar with the details as to what the projects were, but I know manure handling and so on was a part of it. Go ahead, Dale.

MR. SUDOM: Yes, that is a very large part of the agreement, that would be funding directly to farmers to construct manure storage pits and better manure handling systems on their farms. Also, some of those monies would be to farmers to make better use of pesticides, better applications of pesticides, and more efficient use of fertilizer so there are less nutrients going into the environment.

I might add, on the administrative monies, the current account monies, large amounts of those monies were made available to the Federation of Agriculture to put off courses on pesticide usage, and a series of courses have been conducted across the Province, and I believe nearly all farmers now have been trained in the proper uses of pesticides, so that was also a Green Plan initiative.

MR. WHELAN: Thank you.

With regard to the Green Plan, is it a program or a plan that would be going on ad infinitum as far as we know, or is there a certain deadline on it? Is it a three-year plan or program, or five-year program?

DR. HULAN: There is a finite time on it, but again I am not sure how long it is. Again, Mr. Sudom.

MR. SUDOM: The final year for expenditures under the Green Plan would be 1996-'97, terminating March 31, 1997, and that is basically the cleanup year for - essentially after we signed the agreement it was a four-year agreement. It was originally six years, to terminate in March, 1997, but when we finalized the negotiations with the federal government it was actually a four-year agreement with no reduction in our funding, of course, and it is March 31, 1997. Right now there are no further negotiations with the federal government for a continuation of that Green Plan funding, and that is a national program which, I believe, all the funding expires at that time, so it would depend on whether or not the federal government and the other Provinces as well would get an extension to that type of program.

MR. CHAIRMAN: I am sorry to interrupt, but since we are near the half-hour, and we do have a couple of other people we have not heard from, I would suggest now that maybe we will just break for coffee and try to keep it as short as we can so we can get back and try to conclude the activities as quickly as possible. Coffee is available in the government caucus room just across the way.

MR. CHAIRMAN: Order, please!

I would like to recognize Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman. First of all I would like to apologize for getting here a few minutes late this morning. I am here now. Actually the first question I understand has maybe partially been asked earlier this morning, but in general terms I guess, because there are so many questions about it pertaining to the loan board, I know I'm getting quite a few calls lately of people receiving letters about the loan board. As a matter of fact, one man who had thought he had everything settled away as far as making payments and so on, and then lo and behold last week he sees his boat up for tender in the paper. Maybe there is a bit of confusion on that, or that particular one, but I will raise that with somebody in the minister's office, the officials.

Basically, what is happening now with the loan board as we sit here now? Can you give me an update on exactly what has happened with the loans?

DR. HULAN: (Inaudible).

MR. SHELLEY: With the Fisheries Loan Board.

DR. HULAN: Yes. What do you mean? An update on where it is with regard to the integration?

MR. SHELLEY: Yes, the integration (inaudible).

DR. HULAN: The integration as I said earlier is proceeding in a proper manner. All of the officials with the Fisheries Loan Board are still at the old location and will continue to be there probably until about August, when there will be space available in the ENL office. Then they will be transferred, along with the Agricultural Development Loan Board.

The same individuals who have been dealing with clients up to this point are still dealing with those same clients. The Fisheries Loan Board programs are exactly the same. There is no change in programs and there will be none. The only thing that will not transfer to ENL is the repair bounty program that will be retained by my department in Fisheries. The same individuals who have been working with the clients all along will still be there to serve these clients in the future. The telephone number, right now and until further notice, will be the same as it has always been, so there is no change there whatsoever.

MR. SHELLEY: Okay. So the same individuals will be dealing with those applications?

DR. HULAN: Fisheries loan applications, indeed.

MR. SHELLEY: The only thing that won't be coming out of your department is the bounties.

DR. HULAN: The bounties will be retained by my department.

MR. SHELLEY: Okay, thank you. Sorry I missed that earlier. I just wanted to ask the question about the integration.

I'm going to get a little bit more specific now and bring up this issue for another little bit, because I'm going to continue to bring it up, as the minister knows, and that is pertaining to the crab licence in Fleur de Lys. As you know, the company just over the weekend - last week, as a matter of fact - have said that they are going to rebuild that plant of course and go after everything from caplin to herring and everything else. Mr. Minister, though, I would still like to bring to your attention that this is a long ongoing story with the Fleur de Lys plant. I will still say, and I've maintained since two days after I was elected saying, because I studied the whole situation with regards to the Fleur de Lys crab licence, and I will still say that it was an injustice done in Fleur de Lys. It was done in combination of your predecessors in both parties, before 1989 and after 1989.

That doesn't make it right. That doesn't make it right for the people who are in that community. Not only in that community, Mr. Minister, but I can tell you that that is so - to see it in front of you is what really bothers me. That little community with that crab plant was the hub of the whole entire peninsula. People from Springdale came out and worked there, people from all over that part of the Province. Now to see it without a licence because of a mix-up of different ministers - but I remind the minister that they were ministers who made a lot of these decisions, in the previous government and in your government.

Of course now there was a transfer in licence. I don't expect, and I think it is a good move, that there are no new licences reinstated anywhere at this time with the crab industry. I agree with the minister on that. I've agreed with the previous minister when he said that. I agree with that, because I really believe that the crab industry has to be controlled and maintained if we are going to have a sustainable one. I agree with that point. But when it comes to the transfer of a licence - of course the latest example being the Englee situation - then, if there was ever a plant in this province that you can justify as a minister, if there is a transfer possible, I know there is not going to be a lot of transfers, any movement in places, but I believe without going into the details of that whole story, and I would like to do it again with this minister to make sure that he has every detail and it would take us an hour probably to go through it, but the whole chronological stage of what happened exactly with that license in Fleur de Lys. I believe that any government, any minister would see the justification that if there was a possible transfer in this province anywhere that Fleur de Lys should be considered very highly for that transfer of license. They were treated unjustly by different governments.

So, I would like to first of all request that and I am requesting that for this reason: because I asked for it almost two years ago now with a delegation here from Fleur de Lys, which has been here five times now, they have not given up on it and they will not give up on it and I will not give up on it. The premier then, stood in a meeting with me and five other members and the previous Minister of Fisheries and promised an investigation into that transfer of licence. Because I believe, personally, that if there was a full investigation done right on back through the governments and the different levels and everything else, they would see that if there is a transfer possible in this province of a licence than Fleur de Lys is justified in getting it and you would have no problem justifying a transfer to Fleur de Lys who really should have that licence.

DR. HULAN: Okay, Mr. Shelley, let me set the record straight. You implied in your comments that there should be an investigation done. A thorough investigation was done on this issue. Number one; a complete and through investigation was done. It was discussed with your people and a letter to that affect was sent and shared with the town council of Fleur de Lys and you know very well and I referenced it. You know very well that that has been done. Now, let me tell you, let me tell the committee what this gentleman is referring to. On the very last day of the conservative administration in 1989, the very last day at the eleventh hour, the then minister, Mr. Peach, granted to Fleur de Lys a crab licence. The licence was on the last day of the administration 1989, a new licence was granted to Old Perlican.

MR. SHELLEY: That's right.

DR. HULAN: A new licence was granted to Old Perlican. Mr. Peach, ignored their own government policy at the time for the granting of a new licence. There was a freeze on new licences. When my predecessor, Mr. Carter came on the scene I think it was about August of that year, I don't remember exactly when, but I think it was about August of that year, Mr. Carter cancelled the licence at Old Perlican and transferred - because the licences were owned by the same company - the license form Fleur de Lys to Old Perlican at the request of the owner of the license, at the request of the owner and it was quite legitimate at that time to do so because transfers were still allowed. In October, I believe of that year transfers were frozen. So, the gentlemen who owned both licenses, the transfer was made at his request to Old Perlican and that's where if stands now. A through investigation was done at the request of the premier. Am I right Mr. Kingsley?....and it has been shared with your people in Fleur de Lys.

Maybe before I go any further I will let you speak to it Reg if you have anything more to add.

MR. KINGSLEY: Yes, the minister is correct, now the delegation were not given a copy of the report of the investigation, but the results of the investigation were shared with them in a meeting which they had with the Premier - I forget the date now, I think it was last October - and they were advised of the results of the investigation and, as the minister indicated, there was further correspondence with the MP for the area, Mr. Tobin, to confirm that the licence could not be reissued as requested, and the town, as I recall, were copied with that correspondence, so the town has been notified of the results.

MR. SHELLEY: Okay.

Well first of all, as far as the town goes, yes, they did have that meeting. They were never given anything in writing. The investigation - this so-called investigation - still has not answered a lot of their questions. Yes, it was legitimate at the time for you to transfer the licence out of Fleur de Lys into the same company, into Old Perlican, because a mistake was made by Milton Peach - I agree with you, it was a mistake. That still does not make it morally right.

What the problem is here is that Fleur de Lys was used as a scapegoat to make a correctness of one mistake to another. It is as simple as that, and I was hoping that the minister would give some conscience to that particular aspect of it. Whether it was legally right at the time, the bottom line is that this community of Fleur de Lys - not Milton Peach or the Progressive Conservatives or the Liberals or anybody else - the minister should look at this from the perspective that Fleur de Lys, in order to correct the mistake by Milton Peach of reinstating a new licence, which should have never been done, was used as the scapegoat to correct the wrongs.

The other truth of it is that Quinlan Brothers in Old Perlican may have used that as their lever - because once they were given that new licence which they knew they should not have gotten - to damage Fleur de Lys by transferring theirs out. Now that is the bottom line of it. You can be legitimate or anything about it, but the bottom line is that Fleur de Lys was used to get the Quinlans and the government out of a jam which should not have been done in the first place, and that is the point I will always make about this.

DR. HULAN: The thing, Mr. Shelley, really is that at the time of the transfer of the licence from Fleur de Lys to Old Perlican there was no crab being processed. The licence was essentially and totally and unequivocally inactive at Fleur de Lys.

MR. SHELLEY: That is not true.

DR. HULAN: That is true.

MR. SHELLEY: No, no, that is not true.

DR. HULAN: That is true, and the results of the study - anyhow, that is true.

MR. SHELLEY: No, that is not true.

DR. HULAN: Therefore the owner of the licence, Quinlan Brothers, had requested to transfer it to Old Perlican so that they could get on with processing crab and providing jobs for Newfoundlanders, so that is where it stands, Sir.

MR. CHAIRMAN: Mr. Shelley, your time has expired. You may come back to this again your next go around.

Before introducing the next questioner, I would like to welcome the Vice-Chairman of the Committee, and I would ask him to just introduce himself for the record.

MR. WOODFORD: Rick Woodford, MHA for Humber Valley.

MR. CHAIRMAN: Thank you, Mr. Woodford. Mr. Penney.

MR. PENNEY: Thank you, Mr. Chairman. I am Melvin Penney, MHA for Lewisporte.

Mr. Minister, I have a couple of general questions, but before I get to that there are two specific items in the subheads I would like to bring to your attention, item 2.1.02, page 97, item 07, property furnishings and equipment. Last year we budgeted $85,000, spent $52,000, and this year we are budgeting only $7,000. Could you give us some idea of what -

AN HON. MEMBER: (Inaudible).

MR. PENNEY: 2.1.02.

DR. HULAN: Marine Service Centres?

MR. PENNEY: Yes, item 07, property furnishings and equipment. It is a big savings from $85,000 to $7,000.

AN HON. MEMBER: (Inaudible).

DR. HULAN: I am told by the Director of Administration that it is an error here, and the money got budgeted somewhere else through the department, but it is an error in the figure; is that right?

AN HON. MEMBER: Yes.

DR. HULAN: So there is an error in the figure there.

MR. PENNEY: Okay, so that seven would probably be closer to last year's figures?

AN HON. MEMBER: (Inaudible).

MR. PENNEY: Okay.

The next page, 2.1.05, Labrador Development Agreement, item 06, purchased services, last year we budgeted $81,000; the revised figure shows nothing, no expenditure at all. This year we are budgeting $323,000. Could you explain those figures for me, please?

DR. HULAN: That specific item I will ask ADM Murphy to respond to.

MR. MURPHY: Thank you, Mr. Chairman. That just is a reflection of the cash flow from year to year depending on the activity within the program. Purchased Services in that case would perhaps be used this year to cover vessel charters for research purposes.

MR. PENNEY: That didn't happen last year at all?

MR. MURPHY: No. According to this, while there was some activity there it was probably put out under Grants and Subsidies, grants to the industry as opposed to a direct charter from the department.

DR. HULAN: Mr. Penney, I'm also aware of the fact that this agreement is largely proposal-driven and therefore the absolute figures will change from year to year. It is based on the proposals that are received.

MR. PENNEY: Very well, Mr. Minister. If I could come back to a general topic, aquaculture. I've been doing a fair amount of reading about aquaculture in the last few months and I keep running across the expression: Aquaculture being the fishery of the future. Let's hope that our mainstay fishery, the groundfishery, will recover and that we won't be totally dependent on aquaculture. Nevertheless, I think there is some truth to that, that aquaculture, fish-farming, is the way of the future.

Could you give us some kind of an overview as to what the aquaculture industry is doing in Newfoundland, where we are at this point in time in this Province, and how we compare with the other Atlantic provinces, and probably how we compare with British Columbia as well? Where do we fit in the overall scheme of things?

DR. HULAN: Not quite where I would like to see us fitting at this stage. If I could give you some indication of aquaculture production in Canada and other countries, Norway for instance. The production in metric tons - mostly salmon for Norway - 201,000 metric tons. Chile, 85,000 metric tons. These are 1994 figures. Canada, 50,000 metric tons. Newfoundland, 781 metric tons. If we compare ourselves with the Province of New Brunswick, the industry in New Brunswick, largely salmon again, is worth probably a little in excess of $150 million to the provincial economy. Newfoundland, we are sitting at just around $2 million.

Now let me, in defence of Newfoundland versus New Brunswick - an important thing happened in the Province of New Brunswick way back, as far as aquaculture is concerned, in 1962, 1963. The federal government made the research station at St. Andrew's, New Brunswick, chief focus on aquaculture. They hired scientists, geneticists, and all the necessary scientists to develop a capability in salmon, salmonid aquaculture in particular, and as a result of that, that was a stimulation to the province to really focus on it, and they did. They picked up the ball and ran with it. Because they had this tremendous infrastructure in New Brunswick there assisting them, paid for by the federal government.

MR. PENNEY: Mr. Minister, I don't really mean to interrupt you but, how would we compare with say, Nova Scotia or Prince Edward Island?

DR. HULAN: Again, I don't know what the exact dollar figure in Nova Scotia is, but we are behind Nova Scotia.

WITNESS: (Inaudible) Nova Scotia.

DR. HULAN: My ADM tells me in Nova Scotia we are a little behind. Their industry probably would be worth probably $3 million or $4 million; ours is worth roughly, about $2 million to the provincial economy. Let me tell you where we are now. In blue mussel production, we are leading Atlantic Canada. We have doubled that production in the last two years in a row and we expect to do the same again this year.

MR. PENNEY: And the markets are still strong?

DR. HULAN: As far as the major breakthrough that was made here in the Province with the research carried out by Dr. Pat. Dabinett on the giant sea scallop, we are now in the process of developing a hatchery so that we can have a ready supply of seed or spat for the growers. This has been a very positive move.

I guess to answer your question, Mr. Penney, in the last five or six years, the building blocks, the foundation has been laid by this government to now put it in a place to really start to grow as far as the aquaculture industry is concerned. This focus will continue and we have estimated that by the year 2000, the value of the aquaculture industry in this Province will be in excess of $100 million, that's what the suggestions and the aim is for; hopefully we will even do better than that, but as far as salmon and steelhead trout in Bay d'Espoir, the potential is fantastic. Again, we doubled our tonnage in the last year and the production is increasing. We have an interest, because of our move, to provide a ready supply of spat for commercial growers; we have an interest in the Goose Arm area of the Bay of Islands for a major scallop aquaculture site to be developed there with the idea of producing some 50,000 animals a year from that site.

Cod aquaculture is also of interest and a focus on it by the department. Unfortunately, in cod the development at Bay Bulls had a bit of a setback because of the moratoria placed on Northern cod, because that facility was based on taking small fish from the trap fishery and that disappeared with the moratoria that was in place.

We are looking at various options right now and one of them is to establish a cod hatchery and -

WITNESS: (Inaudible).

DR. HULAN: Yes, a company has already submitted a proposal to do exactly that, the operation at Bay Bulls. We will be looking at grow out and release as one of the options here, and we will also be looking at another technology that was used in Norway over the years, and that was the release of larva into protected bays such as Trinity Bay and so on and so forth to develop as well, so the aquaculture industry is very positive. I am hoping that there will be additional stimulus to the industry and that is all I can say at this stage and in the very, very near future that will be very important for this Province.

MR. PENNEY: Mr. Minister, I understand that one of the more viable sectors of aquaculture in Scandinavia would be halibut, that they've been very successful in raising halibut to tremendous sizes. Are we doing anything with that technology here? Are we doing any experimentation with halibut or any of the other related groundfish, the flatfish, halibut, turbot, any of those things?

DR. HULAN: There has been a lot of research done on halibut down at the Marine Lab at Logy Bay. I might say in Norway, they've been experimenting with this species for many years. This is their first year that they've launched out into commercial production in an aquaculture environment. The work being done at Logy Bay is quite hopeful, is quite positive, and the National Research Council of Canada has been supporting that work. We have not ourselves been putting, from our provincial budget, money into that work. The federal vehicle, the National Research Council, has been contributing fairly significant dollars to the work that is being done by Dr. Joe Brown at the Marine Lab in Logy Bay. Again, it is certainly an area that we will, hopefully sooner than later, be launching out into as far as aquaculture production is concerned.

MR. CHAIRMAN: Thank you, Mr. Penney.

MR. PENNEY: Thank you, Mr. Chairman.

MR. CHAIRMAN: We now recognize Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. A few questions for the minister and his staff, first of all as it pertains to agriculture.

In the headings in your Estimates on Fisheries, Food and Agriculture, 6.1.02, Limestone Sales. You budgeted $260,000 last year and you spent $220,000. I notice the budget this year is $181,500. That is a reduction in limestone subsidies for next year. What were the main reasons? First of all, I should say, what was the actual cost last year and what will it be this year per ton to the farmer?

DR. HULAN: The number of tonnage based on the interest last year and so on has been reduced, but I think I would ask Dale to respond to this specific item.

MR. SUDOM: First of all, the price for limestone last year was set at $32 a ton for bulk and $44.50 for the bagged. Unfortunately the uptake on that was very poor and they offered last year limestone at $10 a ton towards the latter part of the year. The uptake on that was considerable. I can't give you the exact tonnage but there were a lot of farmers who availed of that program. This year the price has been reduced from $32 a ton to $25 a ton for the bulk limestone. It is being maintained at the same level for bagged which is imported from the mainland at $44.50 a ton. Based on the fact that the farmers availed of the $10 a ton limestone last fall we felt that the uptake would not be as great this year as it was last year, and so we've made available 3,800 tons of limestone this year at $25 a ton. That is I believe a reduction, but I don't have the figures of the reduction from the tonnage supplied last year. We feel that is an ample tonnage for the farming industry.

MR. WOODFORD: Yes, the tonnage may be ample, but one of the reasons why there wasn't such a high uptake was because of the expenditure. I mean, it went to $32 a ton from $19 over the last couple of years, it is just too expensive. I say to the minister: I haven't got to instill in him the importance of limestone to this Province and to agricultural development. It is one of the basic needs out there, and this limestone did not cost the government $25 a ton. When Havelock Lime signed that agreement six or seven years ago, this is lime left over from the Havelock agreement, really. That limestone was, if not crushed, paid for under agreement and under contract six or seven years ago, if not more, so why should we be charging so much more now? Because what is happening, Mr. Minister, it is forcing the farmers to go to Corner Brook and bring it up for a lot less per ton. That is what is happening in the gypsum plant, and when the uptake was offered last year at $10 a ton everybody went for it, naturally, because it was local, it was there, it went out to the Codroy Valley area, went out all around the Cormack area.

What we had to do the year before and the year before that, I asked the previous minister to offer it to the pastures or something. I think a lot of that was taken up by the pastures that were considered viable at the time, so I think it is very important. I am glad to see that it is gone down $7 a ton this year. I would like to see it go down further because of the previous contract with Havelock and because of the excess in tonnage that is there every year, and most importantly because of how important it is to forage production in this Province, and crop production.

DR. HULAN: In actual fact, just so that the other committee members know, probably I could get away with saying that limestone in this Province is equally as important as fertilizer in many of our fields, and without the proper pH that is created by the use of limestone you do not get as much use of the fertilizer that you use; that is the other thing.

I would have liked to have been able to offer it to the farmers considerably less than what we have been able to do so, but we have to keep in mind that the transportation costs to get the material here to the Island is $35 a ton; $35 a ton in transportation costs, is that right?

AN HON. MEMBER: (Inaudible).

DR. HULAN: Within the Island; it is $35 a ton from Cormack to all the other locations on the Island.

Although I would like to be able to have a lower price, we have to be cognizant of our whole budgetary program and restrictions, and the figure that we came up with, I think, although probably not as low as I would liked to be able to offer it, I was very pleased with what we did arrive at.

Of course last year at $10 a ton, which was basically unrealistically low, and I think you would agree with that, then there was a tremendous uptake of that limestone at that time, but we will keep working on it, Mr. Woodford. Certainly you and I are cognizant of the importance and certainly it is at least a move in a positive direction this year to drop it by $7 a ton.

MR. WOODFORD: As I said, I think the last couple of years, the year before last it was offered, I don't know when a lot of it got out, but last year I think quite a bit of it got to the pastures. I notice in the heads this year - I cannot find it - there is no mention of pastures. It was always in the estimates. I do not see it, unless I am overlooking something.

DR. HULAN: It is in there, Rick.

MR. WOODFORD: It must be buried under something else.

DR. HULAN: I think there should be a figure in there somewhere of $115,000; is that not right?

MR. SUDOM: It is in the grants and subsidy category, in the extension subhead, and I will find it for you.

MR. CHAIRMAN: Would you kindly identify yourself whenever you are speaking, for the record?

MR. WOODFORD: I did not see it there, and therefore I did not go back and get last year's estimates to make a comparison, because last year you closed out a number of pastures, and one of the reasons given for that was the non-viability of those pastures, but the department also said that the money saved from those pastures would be put into the pastures that are viable and that would be of benefit to a particular area. That is why I would like to see this heading.

DR. HULAN: Last year Rick, what happened was the funding to the pastures was reduced by 50 per cent, as you know.

MR. WOODFORD: Right.

DR. HULAN: Certain pastures were told that this year some of those pastures would not be funded, and that is exactly what is happening. It is located Rick on page 113, 6.6.01.10, Grants and Subsidies, $321,000 there. You will notice from last year that is increased by about $115,000, and that is where the figure came into being. Anyhow, there is a figure within our own provincial budget of $115,000 or thereabouts for the pastures that will be funded this coming year. It is there. Those pastures that were told they would remain open, plus a few others that I have to go back and have a serious look at, with regard to the overall issue on pastures and so on, that will be taken care of as well.

MR. WOODFORD: Did the price per animal unit increase this year, or is that entirely left up to the pasture operator?

DR. HULAN: That is left up to the pasture manager, the pasture operators, and that is something that has bothered me for many year, the price per animal unit. Something I would have liked to have seen changed before now. But we will see how the things iron out next year.

WITNESS: (Inaudible).

DR. HULAN: There has been an indication given to the pasture operators that this will be the last year for any funding of pastures. We will follow the report of the task force on agri-foods and go the privatization route with all the pastures in the Province.

MR. WOODFORD: So this will be the last year of funding for any pastures in the Province.

DR. HULAN: That is what the plan is now. I think you should know that. There is very inefficient use of the pasture land of this Province. It is criminal what has been going on. There are 64,000 acres tied up in pastures in this Province and there is less than 5,800 acres that are being used and developed. That cannot be.

MR. WOODFORD: But why throw out the baby with the bath water?

DR. HULAN: I'm not throwing out the baby with the bath water sir, I'm sorry, I would have to disagree with you there. What I'm saying is we have to make efficient use of these lands.

MR. WOODFORD: But could you tell me a for instance, give me one example how you could make more efficient use of it?

DR. HULAN: What do you mean?

MR. WOODFORD: Give me one example now of how you could make more efficient use of pasture land.

DR. HULAN: Number one, the (inaudible) -

MR. WOODFORD: How many pasture lands are being utilized now?

DR. HULAN: Sorry?

MR. WOODFORD: Pasture lands that are being utilized now, give me one example for the record.

DR. HULAN: I would love to take you out around Conception Bay and I will give you a very clear example of very damn poor efficient use of pastures. Number one, going to the privatization of pastures, what we are suggesting is that these private entrepreneurs will operate part of the pasture, or probably even all of the pasture, as a pasture for the agri-food industry, but they may also decide to develop some of that valuable land for other agricultural enterprises. Okay?

MR. WOODFORD: There is nothing wrong with that, but a pasture today that is utilized - a piece of pasture land is no different than any other block of agricultural land in the Province. You only have a certain portion of that particular pasture -

DR. HULAN: That pasture land will be utilized -

MR. WOODFORD: - which will be utilized.

DR. HULAN: - even more efficiently in private hands without government subsidies.

MR. WOODFORD: The minister must know something that the people in the industry don't know.

DR. HULAN: I think the industry will be very supportive in the end, but anyhow that's where it is today.

MR. WOODFORD: We'll have to see what happens, I think -

MR. CHAIRMAN: Mr. Woodford, your ten minutes has expired. I recognize Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

Two questions, first of all I want to get the ministers comments on this because I know he has been talking about this as much as I have. As a matter of fact he had a meeting with Mr. Tobin just a couple of days after I did on this particular issue and that's on the TAGs and the independent board that has been set up now. Of course, prior to that he had the same problems as many of the members in this house had with people going to the level two and which I told the federal minister and I think he even agreed on it, up to that point the appeal process was a farce, nothing short of that. I mean in the two examples I gave, I could give 100 and I'm sure that the minister could give 100. I had a gentleman in my district forty-four years in the fishery, now turned down at the level two appeal while his grandson who was four summers fishing got it. I mean I don't have to go any further than that, it was a farce.

So, therefore with recommendations from me, from other member, from the minister and everybody, and co-operation was needed on that to speak up for Newfoundland, is that the process was wrong and people were falling through what I call the crack syndrome, falling through the cracks - legitimate fisherman. So, Mr. Speaker since then of course with all this lobbying by everybody, I guess, an independent board has been set in place. Now can the minister update us on how many boards, I'm hearing two but I would just like to hear some confirmation. How many people on these boards, who they are and if they are going to be actually indeed travelling the province or are they just going to be set up in St. John's and so on?

DR. HULAN: I can't really share the details with you because they have not been ironed out yet and I still have some difficulties and concerns and they are being made known to the federal officials, there is no question there, but as far as the details on the composition of the boards and so on that has not been finally decided.

MR. SHELLEY: A lot of the level two people that have already gone through the level two process have not gotten answers and have been dragged out now for quite awhile. Am I correct in assuming it is because they are waiting for this independent board to be set in place before they start turning people down at level two again so they won't have to redo the whole process again.

DR. HULAN: Indeed, that is the reasoning I would have to submit to you, and in fact those that were turned down in the other process and were approved and then rejected by HRDC, all of those will be reviewed as well.

MR. SHELLEY: All of the documents. That was the next question because people want to know where they can go from there.

I don't know how to ask this question, I suppose you can't answer it either maybe at this point, but I am really wondering or waiting to see how this independent board is going to look at it differently than what the level two because I also said to the minister, and I am sure you have, that the truth is that the HRD and that department is determining the faith of these appeals and not Mr. Tobin and his department at all, which I would like to see it go to. So, have you made recommendations as regards that, as far as whether these decisions are back into the Department of Fisheries and Oceans and not in the HRD?

DR. HULAN: Absolutely that has been made and in fact we would like to see the whole issue handled by the Department of Fisheries and Oceans, but that has been certainly discussed with both ministers I might add.

MR. SHELLEY: Thank you.

I just wanted to make that point here this morning, I think we are on the same wavelength with that.

Now back to crab licences, not on the Fleur de Lys crab plant licence but on the individual crab licences this year for new licences for crab boats thirty five and under, I think it is. Could I just get an update on how people go about submitting to these for criteria for getting these new licences?

DR. HULAN: The crab program for this year has not been finalized yet. There will be a draw for any additional licences that are finally arrived at for the province. It will go in a draw as it did on the West Coast last year.

MR. SHELLEY: How many? I'm hearing 135, is that correct?

DR. HULAN: The final program for the year has not been finalized. The numbers have not been established yet as to how many new licences -

MR. SHELLEY: Can you give me a ball park figure, 100 or 500, I mean -

DR. HULAN: I would not want to do that at this stage. Is there anything you can add -

MR. SHELLEY: I am not asking for a specific number. In the area of 100 to 200, 300, 400. I mean can you give me at least that? Just for some indication, I'm not trying to nail the minister down to anything. I just want to know in what area are we talking about, and how many licences?

DR. HULAN: We have to be cognizant of our resource out there and -

MR. SHELLEY: Yes, that is why I'm asking the question actually.

DR. HULAN: - we are looking at it very carefully. I'm almost super-paranoid on that. If I could make a guess - and this is just a guess - 300 to 400 maximum.

MR. SHELLEY: Three hundred to four hundred, okay.

DR. HULAN: Maximum. But that is only a guess.

MR. SHELLEY: That is fine. I don't mind telling the minister that basically I'm cognizant of the same thing in the industry, and I would just like to have an idea of what area, and that is fair enough. If it goes 450 or if it goes 250 then it is still acceptable.

The criteria for these new licences, are they established and can I have a look at the criteria? For anybody who is applying for this, what do they have to look for? The boat size, what they had before and everything else, I mean that the criteria should be established by now. Can I get that? Can anybody get that?

DR. HULAN: Again, nothing has been finally established there, but some of things that it is leaning towards is heads of enterprises as being one, and boats thirty-feet and below, right? Most of them will be thirty-five feet or below. All of these criteria, Mr. Shelley, have not been finalized in the crab program for this year yet.

MR. SHELLEY: When do you expect that? In months? Weeks, it has to be, (inaudible).

DR. HULAN: I would hope within the next two or three weeks at the latest.

MR. SHELLEY: Interested people in this - is there a basic application to submit in writing to your department? How do they go about it? I've been asked the question: How do I go about looking for one of these licences?

DR. HULAN: Again, not to my department. The licensing is a DFO responsibility -

MR. SHELLEY: Yes, I realize that.

DR. HULAN: - and the applications would be submitted to the DFO offices.

MR. SHELLEY: Okay, so it is an application. I know they would go federal.

DR. HULAN: Is there a specific application form?

MR. SHELLEY: A written submission, is it?

WITNESS: (Inaudible).

DR. HULAN: I guess an indication of intent, the desire to acquire a licence, and then the name would be put in and it would be finalized on a draw.

MR. SHELLEY: Okay.

DR. HULAN: Yes.

MR. SHELLEY: That would be soon you say.

DR. HULAN: Hopefully within the next two to three weeks.

MR. SHELLEY: I'm just going to change in midstream here because I don't have a lot of time left and I think this is the last set of questions I'm going to be asking. I'm jumping around a little bit but I want some more information, and I'm sure the minister likes this one anyway. It is in agri-foods and that is the blueberries, the potential for blueberries.

I know that because in my district over the last few weeks I've had some people come forward. Of course you know with the burn overs and that on the Baie Verte Peninsula that it is a prime location also for blueberries. As a matter of fact, the last few seasons have been very good there. Now we have some people interested in our area and they are starting to talk to me. In all honesty I will admit ignorance to a lot of that, as far as the commercial blueberry crop, but there are people who come forward with proposals. I would like to know where you think that is leading. Where would these people go to get more information from your department and go to the right people to look at possible sites?

DR. HULAN: In fact, our small fruit area - don't take anything by my talking about small fruit specialists and so on - they do the site assessments with regard to the suitability of a particular acreage for blueberry production. Certainly the word is in my department that if any individual or group of individuals are interested in developing this particular industry the department is to assist in every way possible to make that happen. I'm a great believer not only of blueberries but of the partridge berries and bakeapples of this Province, that we have to get on with that terrible neglect over the years when these berries have been ignored. There is tremendous opportunity there in some areas now.

Having said that, I must say - for instance, St. George's on the West Coast of the Island has been touted to be the blueberry capital, as the Chairman knows, and so on and so forth. You know we had a total area assessment last year and no place out there were the assessors able to find sufficient productive areas to encourage commercial blueberry production.

MR. SHELLEY: There was nowhere in St. George's?

DR. HULAN: No, not to encourage commercial production.

MR. SHELLEY: What would it take then, Minister, why not?

DR. HULAN: Sorry?

MR. SHELLEY: What would it take then? Why not?

DR. HULAN: The blueberry bushes were just not there in sufficient quantities to encourage commercial production. The yield would not be there.

MR. SHELLEY: So, do you see anywhere in this Province, where the yield would be sufficient?

DR. HULAN: Oh, yes. There are all kinds; out around the Bonavista Peninsula we have tremendous potential and the Conception Bay area, I wouldn't be a bit surprised if maybe in your area as well. However, the point that I was making, although we have led ourselves to believe over the years that there are tremendous blueberry production possibilities in the St. George's area, when we did a total and proper assessment of the potential, it just was not there.

MR. SHELLEY: So the first thing that needs to be done, if anybody is considering this, is to get an assessment of the area?

DR. HULAN: Oh, absolutely. You may have seen in the news the issue over the Bonavista Peninsula proposal. Our department has been working with these people and that request is for a lease of land for blueberry production of 2,500 acres, where we would not and I would not condone such an approval without having a proper assessment of the area, so we have approved the project in principle, and now that the snow cover is gone, our assessors will go out from the branch and assess the area properly as to its potential for commercial blueberry production; and I hope and I am sure that good potential is there but we will have to see when a proper assessment is made.

MR. SHELLEY: Well, that's fair enough. That's what I would like to see and if it is there, go out and develop it.

Okay, thank you. I am going to jump around again -

MR. CHAIRMAN: Mr. Shelley, do you have any more questions? Your time has expired but if you are about to clue up, I will -

MR. SHELLEY: Yes, I will clue up with one more question, if I may?

MR. CHAIRMAN: Okay.

MR. SHELLEY: Sealing. Of course you know I have been very vocal in that area also and the last reports I am hearing is that you will be looking to the markets again and hopefully we will get to a market capacity where we can take a full quota here in Newfoundland because I think the industry has tremendous potential and is untapped really, and of course down in my area sealing is very important.

In your trips that are about to come up now, Mr. Minister, I would like to ask the minister if he has some key interest in certain parts of the industry and what particular markets they are going to look for now? Could you update us on what your trips may entail?

DR. HULAN: Well I will be leaving this week to go to Italy and France to finalize the technology transfer of a new tanning process to the Province. We have identified an area, a site where we will carry out a pilot experiment this year of tanning with this new process about 500 seal hides to demonstrate to Newfoundland that its a doable thing here. The process is a very exciting development in the tanning process as you know; the big problem with tanneries all around the world has always been pollution to the environment, and in actual fact I can tell you that I had played a small part in the development of this process while I was at Memorial University, the technology is largely French technology and somewhat also Italian technology.

The process is totally, totally environmentally friendly and it produces a quality of leather second to none, so it has great potential and is suitable for all hides that we know of. Certainly, the French have tanned rhinoceros hides with it and it has worked very, very well. Sometimes people accuse certain politicians of having hides like a rhinoceros, as an indication of the toughness of their hides, but anyway the technology will be very important, not only for the sealing industry but hopefully for the developing sheep and lamb industry that seems to have generated some interest in the last year with regard to the establishment of a sizeable sheep and lamb operation in the not too distant future. Of course, in the area of a sheep and lamb operation, a large part of the profit is in the hide, that up to this point in this Province, we have been throwing out in the garbage, so it is an exciting development, in particular to the sealing industry, it is absolutely imperative that we start a tannery.

With the establishment of a tannery, we also have some of the finest seamstress people in North America right here on the Island, so the move along with the tannery will be into secondary processing of leather into garments and clothing. So that is where we are going on it, and I just hope that it will proceed at our pace.

MR. SHELLEY: Well, I wish the minister luck in that particular industry. I am very interested and I will be watching very closely to see how it develops.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Shelley. Thank you, Mr. Minister. Mr. Woodford.

MR. WOODFORD: Newfoundland Farm Products, what is the latest on that? Are you still in the process of trying to sell Newfoundland Farm Products?

DR. HULAN: Newfoundland Farm Products will be, sooner or later, privatized. The proposal that was submitted, and I have gone through this before you came in, Mr. Woodford -

MR. WOODFORD: Oh, I am sorry about that.

DR. HULAN: That is okay. That is fine. I will quickly tell you that the proposal that is before us right now by the Chicken Producers Association of this Province is still there. It is now being revised somewhat in view of the bottom falling out of the Ontario chicken prices in the last eight to ten months as a result of the Canada/U.S. free trade deal, so their proposal now is a very, very - I won't mention it because it is their proposal. I think it is where they should have been at the beginning of this game. There is some great potential in this Province, and I will just add this for your own imagination. Newfoundland sits in a golden position to produce a salmonella free bird for the world market, because we are isolated and we can completely isolate that organism. My friends, who are experts in the field in North America, and I have been talking in recent months. There is a real potential here for a salmonella free industry, and that opens up a whole new ball game as far as the poultry industry in Newfoundland is concerned, but as far as the broiler industry is concerned their latest proposal is very, very positive, and I think at the end of the day will establish the poultry industry in this Province on a very, very, very sound footing.

Of course, we are looking at many aspects of it and one of the big issues, and not one of the big issues, gentlemen, but the biggest issue, in small animal production in this Province is getting a control on feed prices. On that they have developed a proposal that is very, very sound and interesting. That is still proceeding, Mr. Woodford, and will continue to do so in the ensuing months.

MR. WOODFORD: Under the heading 6.2.01, Administration and Support Services, under allowances and assistance -

DR. HULAN: Where is it?

MR. WOODFORD: Page 109 of your Estimates.

DR. HULAN: Okay.

MR. WOODFORD: 6.2.01 down to 09, allowances and assistance, what would be the reason for that and what would be included?

DR. HULAN: Why the increase?

MR. WOODFORD: Yes.

DR. HULAN: That is SEP funding that we will be using in the alternate feeds program, developing alternate feed (inaudible).

MR. WOODFORD: Developing alternate feeds.

DR. HULAN: Yes.

MR. WOODFORD: Would that also be the reason for your increase in salaries in that particular heading?

DR. HULAN: That is a transfer, Mr. Woodford, of some of the extension positions into Administration and Support Services, no loss of salaries or any change, just a transfer from one section to the other.

MR. WOODFORD: The $200,000 for construction and alterations in 6.4.02, Newfoundland Farm Products -

DR. HULAN: Yes.

MR. WOODFORD: Is that primarily for out here in St. John's?

DR. HULAN: That is for the corporation in general, not only for the St. John's plant but also for some changes that were proposed for the Corner Brook plant as well, so it is for the corporation.

MR. WOODFORD: Under 6.5.01 page 112, Administration and Support Services. It includes veterinarian support services provided by the department. Under supplies; on 04, what is included in that, exactly?

DR. HULAN: Well, that is supplies for veterinarians, what comes under that; hypodermic syringes et cetera, all the supplies. Everything that they sell to farmers at the dispensary.

MR. WOODFORD: Why would there be such an increase in that, especially a projected increase?

DR. HULAN: Well, one of the reasons for it, is the first of July we had to prepare for the future. The first of July, we are very fortunate in being able to obtain, I should tell you this, probably the best poultry diagnostician in all of North America will be on our staff the first of July. A poultry veterinarian that the poultry industry has been asking for now for the last fifteen years, Dr. Conrad Van (inaudible), from Ontario, has agreed to take up the position the first of July. He is without question the top poultry diagnostician in North America. I know him personally. I didn't even know that he had competed for the job until I got the three names on my desk and of course he came out loud and clear in the examining process. He has agreed to come and take up the position and some of the additional material will be for pathological examination, that he will be involved in. Some of it is due, as my ADM has just indicated to me, due to a new slaughter house inspection service -

MR. WOODFORD: Red meat program.

DR. HULAN: And supplies that will be required in that area as well. That's handled by the veterinarians.

MR. WOODFORD: Getting back to the pastures. What are your intentions with regards to those pastures? Splitting them up, offering them to private operators like they are or splitting them up as farm units?

DR. HULAN: The proposals will be called for and right now the intention is not to split them up. Individual or individuals that submit a proposal would have to detail in their proposal what they will be doing with the pasture. Right now we are waiting for proposals. In one particular pasture we have two very, very, very strong and interesting proposals and in each case the proposals will be examined by my department officials and a decision will be made as to what direction it will go in.

MR. WOODFORD: But that's on the pastures that you were supposed to have closed last year, or are they the ones that are still open inclusive?

DR. HULAN: No, the ones that are being called for right now are the ones that were notified last year that funds were withdrawn and there may be, depending on how the proposals are in the evaluation process, some need to split up pastures. We are not going to carve it in stone.

MR. WOODFORD: Is it possible, and I will use an example, if I wanted to come in and apply for the Cormack pasture for a farm development plan, would I get preference over Mr. Whelan, if he came and applied for that pasture for private use for the same purpose it is being used for now? If he wanted to say charge Rick Woodford twenty dollars per animal unit to use his pasture - who would be given preference?

DR. HULAN: It would be totally dependent on the strength of the proposal.

MR. WOODFORD: It is possible that I could go in and make a proposal for Cormack pasture and use it as a farm?

DR. HULAN: It's possible, but what we are insisting on is that part of the pasture or all of the pasture will still be used as a private pasture for individuals to come and rent pasture space. That's still going to be in there.

MR. WOODFORD: Okay.

DR. HULAN: The other thing I didn't mention was that this will not be done blind and in total removal from the agricultural industry itself. We will consult with the various producer groups - sheep producers, beef producers. The Federation of Agriculture will have input into this as well.

MR. WOODFORD: Yes, because while the intent may be to, for instance, put it out to somebody who will still use it as a private enterprise and be able to put your animals on pasture and so on, eventually they would have to increase the cost per animal unit. If government can't run it like that then the private entrepreneur can't run it.

DR. HULAN: That is right.

MR. WOODFORD: Eventually it could indirectly lead to the closing of that particular pasture if the cost per animal unit got beyond the individual's reach as regards cost and expenses. So that is a danger there.

DR. HULAN: Yes, but again I would suspect that the operator would be interested in - and certainly part of the proposal will be to require - that I will be looking into the proposals as to whether the proposal is going to be for the total development of the pasture for another agricultural enterprise and no place for the rental of pasture space on a private basis. Part of the pasture will have to be available - that will have to be a very important part of the proposal.

MR. WOODFORD: Be very careful with it.

DR. HULAN: Oh yes, absolutely.

MR. WOODFORD: Under your Land Development on the acquisition of farm lands under the Agricultural Land Consolidation program, I know there was $100,000 put into that last year and $100,000 spent, $100,000 projected this year and estimated. What land?

DR. HULAN: Where is that again?

MR. WOODFORD: Oh, your heading is on page 108, 6.1.04. What lands and what acreage were bought back this year?

DR. HULAN: That I would leave to the ADM. What lands and what acreage -

MR. WOODFORD: What lands were taken up under the Land Consolidation Program? What actual lands and where were the locations. I understand that is just on the Avalon for now. I've requested for the last number of years for that to be extended to other areas of the Province, because the bottom line on this is it is a lot less expensive to cultivate and to do something with a piece of land that has already been cleared then it is to try to fund another piece of wilderness, to cut that out and put it into a farm. I have always used the argument, could never get it through anybody's head, what it costs to take a piece of wilderness and put it into a farm, and to take a piece of already cleared farmland and work it.

DR. HULAN: It improved the productivity.

MR. WOODFORD: Yes, that is right. How much acreage was involved?

MR. SUDOM: The division of those funds in that particular account, the $100,000 is for the access road program, so that is for maintenance and upgrading of agricultural access roads. The $400,000 as you indicated is for the purchase of lands in the St. John's agriculture development area, the area which is formally zoned for agriculture development, which restricts other types of development. That is why the funds are directed at the St. John's area in terms of the purchase of lands.

In terms of your question on how much land was purchased last year, I have to apologize that I don't have those figures. I started in my position January 9 and those transactions had already been done and I'm not sure of the figures. Some of the monies are allocated to the purchase of lands from years previous where they spread the payment of that over a number of years. We could certainly get the figures on the acreages purchased in the program in total and last year and table those for you.

MR. WOODFORD: So there is a possibility that no acreage could have been bought last year, the payments were spread out.

MR. SUDOM: There was definitely new land purchased last year. I believe only about $200,000 to $250,000 is attributed to purchases that are spread out for previous years. Again, I would want to confirm those exact figures, because I apologize, I just don't have them with me today.

MR. WOODFORD: What about the disposition of land and the granting of leases? This particular land that was bought, do you have any that was passed out this year on a Crown land lease, or a lease from the department?

MR. SUDOM: Yes, there were a number of parcels that were advertised, and they are in the final stages now of allocation, and prospective purchasers of those parcels have been notified, so there are a number of parcels that were advertised. To my knowledge, I believe all of the parcels that have been bought so far, with the exception of maybe one or two, are back out to private industry.

MR. WOODFORD: They go out as leases, don't they?

MR. SUDOM: Yes they do, Sir.

MR. WOODFORD: Even if the land that you bought was granted, do they automatically go back out, all go out as leases after?

MR. SUDOM: Mr. Chair, I do not have to keep identifying myself each time?

AN HON. MEMBER: Just your name.

MR. SUDOM: Yes, okay; I am sorry.

Could you repeat the question, Sir?

MR. WOODFORD: Say, for instance, if you bought 100 acres of land and there was thirty of that leased when you bought it, a farmer could quite possibly have the Crown that was leased, and he could have a grant on the rest. It comes back to the department. Does it all go out as lease after, or is that particular grant kept?

MR. SUDOM: Yes, after we purchase the land - they are all grants that we purchase; they are all freehold land - we convert those lands immediately to Crown lands and then they are reallocated through the Crown lands system and sold as Crown land leases.

MR. WOODFORD: The same as an agricultural lease if I went to Crown lands for a piece of wilderness, the same lease would be applicable to them?

MR. SUDOM: Yes, pretty well the same terms and conditions, the same rental rate per acre. The only difference is, because there have been improvements on this we basically sell the lease for the value of the improvements.

MR. WOODFORD: Are there any plans to change the lease back to the grant system?

DR. HULAN: Change the lease back to the grant system?

MR. WOODFORD: Revert back to your grant?

DR. HULAN: That is something that has been a subject of controversy and discussion, and at this stage I would say absolutely not.

MR. WOODFORD: Absolutely not. Very good.

Mr. Chairman, I will stop there. I only have a few minutes left, in any case.

MR. CHAIRMAN: Thank you, Mr. Woodford. Are there any other questions?

I would now ask the Clerk to call the heads, and with the agreement of the Committee I would suggest that we deal with heads 1.1.01 through 6.7.03 inclusive.

On motion, subheads 1.1.01 through 6.7.03, carried.

On motion, Department of Fisheries, Food and Agriculture, total heads, carried without amendment.

MR. CHAIRMAN: That concludes the hearings for the Estimates of the Department of Fisheries, Food and Agriculture. I would like to thank the minister and his staff for their co-operation this morning. I would also like to thank the members of the Committee for their co-operation. I would also like to recognize and thank our support this morning from Elizabeth Murphy, our clerk, Paul Kelleher, our page, and Mr. John Oates who is looking after the recording.

Now I would like to call for a motion to adjourn.

On motion, Committee adjourned.