Agriculture Committee on April 27th, 2010

[The Chair, Conservative, Larry Miller]

Okay, we're going to call this meeting to order. Our time, as always, is too limited.

It's great to be in Alberta on the second day of our study into the future of agriculture, in particular what we can do to attract and keep young people in agriculture.

I'd like to say thank you in advance to all of our witnesses for being here today. Being a farmer myself, I know how hard it is to take a day or a morning off. We really appreciate that.

If we could have your presentations for five to seven minutes maximum, it will be appreciated. I'll put my hand up to motion there are two minutes left. If you don't quite get through your presentation, you can hand it in to the clerk. With the questions, you can always enlarge on the points that you care to.

Our first witness is Doug Scott.

[Doug Scott, Director, National Executive, Alberta, National Farmers Union]

Good morning, all. I find this a little bit unnerving, as I've never appeared before a standing committee before, and to be the first presenter is interesting.

I'm here representing the National Farmers Union Youth, and certainly I am not a young farmer. I've been involved in the business for a number of years. Ours is a century farm, settled by my grandfather and great-grandfather in 1908. The report that I'm about to give to you has been prepared by the young farmer wing of our organization. And interestingly enough, the age at which the NFU considers young farmers to be was changed this past year and now we consider young farmers right up to the age of 35.

It's no secret that Canada is losing farmers at an alarming rate, especially those who are younger than 35. Statistics Canada information shows a 62% drop in young farmers over the course of 15 years and a consequential rise in the average age of farmers. We can see that clearly farmers in Canada are getting older and that there are very few young farmers choosing farming as a career. I think overall, if we were to look at the statistics, we would see that between 8% and 9% of farmers in Canada are younger than 35 years. Probably about 40% of them are above 55 years of age and the remainder are in the age group of 35 to 54 years, so clearly there's a big shift coming.

The potential negative effects of this continual shift were recognized decades ago, and it's only recently that a major effort has been made from many sides of the industry seeking solutions. The demographic changes can be attributed to many factors, such as market fluctuations, more efficient production methods, improved technology, and more career options for young people to choose from.

The current statistics on young farmers show that something more dramatic has happened in agriculture to cause this decline. Potential new farming entrants have lost the support mechanisms that reassure them that they will be able to earn a living from farming. Most farmers start out their career as small farmers and then grow larger for various reasons. The mechanisms that small farmers use to get started are basically the same ones that new farmers will use when they start farming. However, these mechanisms have been depleted over the years, and as small farmers lose their ability to earn a living and new farmers no longer have the security they need to begin their career, the result is fewer and larger farms as well as fewer and fewer entrants into farming.

Some examples of these support mechanisms for small farmers are supply-managed production systems, so they can actually see that there's going to be a profit at the end of the day; collective marketing strategies; ability to save and reuse seed; producer car-loading sites; and local accessible infrastructure to assist in the first stages of processing and marketing our farm products. These systems clearly benefit small producers, but they are threatened today, and sometimes by the voices that are searching for ways to regenerate interest in agriculture among our young people. It's interesting, from a western perspective, because what we see in farms is not necessarily what we see across Canada. There are many smaller successful farms in eastern Canada. A lot of them are involved around direct marketing of their own produce, vegetable gardens and so forth, and these people are actually making money farming.

There are actually three areas of agriculture policy that have an effect on beginning farmers, and I would like to call your attention to ones that we think are very important. The first one is financing and insurance. Farm debt has skyrocketed to an estimated $62 billion. It's increasing at the rate of $2.5 billion a year. Unchecked, it will double again by late 2020s or 2030s, so the increase is rapid, and it's relentless. Basically, it starts in about 1994, and that's when we started to see the growth in farm size.

Have I only two more minutes? Okay, I'll run through this really quickly then.

Basically, what has happened is that as farms have become larger and larger, debt has correspondingly increased. Another thing that's alarming is the amount of debt that's carried per dollar of a realized net farm income.

We all understand that you need debt in order to run any type of business, but the increase in debt in the Canadian farm population is alarming. Young farmers are going to need access to land and intergenerational transfer. Many beginning farmers find themselves unable to provide the necessary security that banks require to borrow the sums needed for purchasing land. If and when they are able to secure the funds to purchase property, the debt load on new farmers is enormous.

The NFU Youth makes the following recommendations: a land bank system of tenure guaranteeing a fair price to the seller while offering new farmers affordable conditions of purchase; intra-generational transfer programs that facilitate the movement of land and capital and minimize the cost in tax burdens on both generations; and a limit on land speculation, foreign ownership of land, plus research support promotion of alternatives to land ownership, such as cooperatives, could be solutions for new farmers.

Also in regard to federal programs, business risk management plays an extremely important role in Canadian agriculture, and with increased instability in markets and climate producers rely on federal program support programs to mitigate risk. The recent transition in a few provinces of agricultural stability crop insurance offices demonstrates practical moves to create a more accessible producer-focused approach to this assistance.

The NFU also makes the following recommendations: lower caps on federal support programs to $500,000 to ensure more support gets to the most vulnerable farmers; maintenance and strengthening of farmer-led supply management and orderly marketing systems to provide stability for new farmers; simplified federal support programs for young and new farmers to make them accessible without hiring a professional accountant; and regionally administered programs to support new entrants advertised effectively in local rural areas.

In conclusion, I'd like to say that in recent decades agricultural policies in Canada and similarly throughout the world have deliberately and systematically removed mechanisms of protection for farmers. This has resulted in fierce global competition in the marketplace. A lack of resolve on the part of governments to control consolidation in the industries that not only supply farmers with their inputs but also purchase their goods has resulted in farmers dealing with corporations that are so large and without competition that farmers cannot earn a decent living in Canada.

Whether this movement has taken place in the name of economics, agri-food science and technology, or increased production and efficiency, it has clearly neglected some of the most important requirements for long-term sustainability of the sector. Strengthening the systems that create stability and increase market power for individual farmers in Canada will result in renewed interest. For the just under 30,000 young farmers in Canada today and the fastest declining numbers in history, we simply cannot afford to continue along this path. A policy direction that focuses on valuing small producers is the only option for long-term renewal in agriculture.

[The Chair, Conservative, Larry Miller]

Thank you. One of the advantages that we have with written presentations is that all the members get to follow up and read them, so it's good. Thank you.

Mr. Stokes and Mr. Larsen, I understand you're presenting together, so you have five to seven minutes, please.

[Darrell Stokes, As an Individual]

Good morning.

My name is Darrell Stokes. I’m a farmer in the Drumheller district, about a hundred kilometres east of here. I am accompanied by my friend Ken Larsen, from Benalto, west of Red Deer.

We are pleased to appear before this committee to represent ourselves as farmers as well as members of the Canadian Wheat Board Alliance. It's a new organization that supports the current single-desk monopoly mandate of the Wheat Board and will promote candidates for election to the board of directors.

The subject of your committee's work is young farmers and the future of farming. I would like to be able to tell you that there is a bright future for young people to get into the farming business, but in truth there is not, at least not in the prairie region of western Canada.

The idea that a young person could decide that he or she wanted to start a farm from scratch today is completely out of the question. They recognize that both the economics and the policy environment are hostile. Starting a new farm means borrowing to buy land and equipment. The debt load from this is overwhelming, and does not even begin to deal with operational expenses that come from planting, fertilizing, spraying, and harvesting a crop. This is not an issue that can be solved with loans, even interest-free loans. The economics just do not make sense.

What must be done from this point forward, if young farmers are to have a future, is to help them stay on, or come back to, the family farm. To do that, we must make the economics of farming look reasonable, and they are not reasonable today.

Although farmers’ gross income has risen substantially in the last 20 to 30 years, our net income is almost the same. We grow more bushels, we transport more bushels, we sell more bushels than ever before, and yet farmers see virtually the same number of dollars profit per acre as we did 30, 40, 50 years ago. Adjusting for inflation, we actually get less than the previous generations.

Farmers are doing their job. They're providing food for a hungry planet, investing in new technologies, being good stewards of the land. Yet the benefit from most of this goes not to the farmer, but to the agri-business industry that has grown exponentially in the recent past. The huge disparity, measured in billions of dollars, between the value of what farmers produce and what they get paid is swallowed up by input suppliers, rights holders, processors, transport operators, and retailers.

We all want the best for our children, the young farmers. We want them to enjoy happy, productive lives. We want them to get an education. You have to ask, why on earth would they want to come back to the farm? Why would they want to take on the headaches and stresses of trying to operate a farm, struggling to earn one or two percentage points on their huge investment? Why wouldn’t they use their education to make a comfortable living without the struggle?

Well, there is a reason that they might. A farmer’s life is a good one. We all know about the fresh air and the sunshine, but there's more to it than that. You can take pride in a day’s work despite the hardships. You can have the satisfaction of knowing that your labour has meaning, that your contribution to your community helps it stay strong and vibrant. A farmer’s life presumes a certain dedication to an idea that rural Canada can work. But all of those reasons for optimism will wither away without the economic model that will allow young people to look forward to a future.

Do we expect that agri-business input suppliers will choose to lower their prices so that farm costs can be kept to a reasonable level? No. They'll charge whatever the market will bear. That's the way they operate.

Do we suppose that oilseed processors or beef packing plants will choose to give the farmer a little better price for their product? No. They'll pay as little as possible to get what they need. That’s their business model.

Do we possibly think that the transportation industry for agricultural products will take a little less for their services so the farmer doesn’t have to pay so much? No. Their business model says “Get as much as you can for your shareholders”.

Do we expect that the food wholesale and retail industry will ever provide parity from their profit margin back to the farmer? No. Their business model says “Buy for as little as possible and sell for as much as possible”.

So where among all that can there be any optimism about the future of farming, where our only business model is to buy at retail prices and sell our production at wholesale prices?

Years of pressure to deregulate, ostensibly to foster competition and maintain low consumer prices, has led to our current situation. Today, in the era of corporate consolidation and takeover, there is less competition. Although Canadian consumers spend less of their household income on food than any other consumers in the world, are they getting the benefit of low farm-gate prices?

The responsibility for maintaining low consumer prices seems to fall on the back of the original producer, the farmer, all by himself. It shouldn’t, but it does.

The only economic factor that farmers can rely on is cooperative effort. If farmers are forced to stand alone, as individuals, against those who make the rules and set the prices, farmers will continue to lose. It is inevitable.

The history of western Canada shows us that farmers lose when they stand alone. Our grandparents created the Canadian Wheat Board so that farmers did not have to stand alone.

If we are to promote the idea of a viable future for our young people and there is to be a future for the family farm, then we need institutions that will serve the farmers' best interests, in the same way that a corporation is obligated to serve its shareholders' interests. The Canadian Wheat Board is an institution whose sole purpose is to serve the farmers' best interests. The Canadian International Grains Institute and the Canadian Grain Commission are also instrumental in promoting Canadian agricultural products around the world for the benefit of farmers.

These institutional safeguards are constantly under political pressure. Private enterprise, looking for ways to maximize shareholder returns, wants them out of the way and lobbies our federal government continually to weaken them. If young farmers are to have a future, we need to be strong and vocal in our support of these institutions. If we are silent, our political representatives will be unduly influenced by those who would benefit from the demise of these safeguards.

If our ancestors had not created the Canadian Wheat Board, and if it had not been strengthened with a farmer-controlled board of directors, then the international and domestic marketing of Canadian wheat, durum, and barley for human consumption would be controlled by private agri-businesses. Would we then expect that, without the board, these companies would pay the farmer whatever they sell the grain for and take a little overhead fee? No, I think you might agree that they would pay the farmer as little as possible and sell it for as much as possible.

Most of you probably know how the Wheat Board works, but just in case there is any misunderstanding, let me take a moment.

At the time of delivery, the board pays the farmer a portion of the projected selling price; then it takes the farmer's grain into the marketplace and sells it for the best price it can get at that time. After the year’s business has been completed and all the sales have been made, the board pays the farmer the balance of the pooled selling price for that product and grade over the course of the whole year.

In 2009, the charge for doing all that plus the board’s invaluable market development and promotion of Canadian grains cost the farmer nine cents per bushel. Can you imagine any of those aforementioned agri-businesses doing that? Neither can I.

In conclusion, I want to make the point that the future of the family farm and of the young farmers who will raise the next generation of farmers has to include farmers standing together, with market control. If we lose the wheat board and have to stand alone in the marketplace, then farming as we know it will begin to die with the passing of my generation.

One view of the future has family farms being replaced by huge, monolithic farming corporations run by MBAs and accountants whose feel for the land is non-existent. Farm labour will be hired for minimum wage, nobody will care about the environment, and rural communities will fade away. You don’t have to look very far to see some of this happening already.

The message I would like this committee to take back to Ottawa is to stop the political worship at the altar of free trade and open markets and to look at the reality. An honest look at the end result of this strategy shows that farmers have not benefited. It would also be fair to ask whether consumers have benefited. Our impression is that the only people to have benefited are those who sit in the middle between farmers and consumers, and of course those whose living is so enriched by providing farm inputs.

I hope you can take the time to review the package we've distributed to you containing some additional material that we couldn't fit into our short time. The National Farmers Union has put together a very interesting look at how farmers and consumers have fared as a result of 19 years of free trade and open markets. There will be an updated version of this brochure available this summer.

In conclusion, the young farmers of the future need a chance to survive. They need all the help they can get from family, neighbours, friends, and the institutions that have been created to serve them. Let’s keep the young farmers we have and give them reason for optimism.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now go to Mrs. Staniforth for seven minutes, please.

[Margo Staniforth, As an Individual]

Hi. I'm Margo Staniforth. I'm here as a farm operator-owner and as a farm wife. We have a son who is 27 years old who is looking to come back to the farm.

I have put together a bunch of notes that I will read off to you so that I make my point, and I'll try to keep it brief.

I feel that to isolate this issue is nearly impossible without first having a clear picture of the total business environment that this industry is dealing with. Currently the percentage of farmers who are not encouraging youth to return to the farm is in the area of 70% to 75%. The average rate of return of youth to the farm is about 8%. This means that wherever 100 family farms manage the land and produce the grain or livestock, soon they will be replaced with only eight farms. With the current government concept, farms will just get bigger.

With these figures in mind, this is not only an unproven theory, but pretty much humanly impossible in most counties. This mentality will produce a large percentage of abandoned land. To maintain economic stability and development, land must be used for the purpose it was intended for. It is being reported that in light of the dry spring and the lack of feed, there are people abandoning their farms in northern Alberta right now. They have given up their farms, their livelihood, their investment in their farm operation and have simply walked away.

The average farm debt is seven times every net earned dollar on the farm. Approximately 2.4% of the Canadian population carries the same debt load as the other 97.6%. The reality that farm owners are willing to walk away and stick the bank with the land in bankruptcy should be a concern enough for government to work harder to improve the financial well-being of the farm producer population in Canada. If farmers all simply walked off their land right now in Canada, the big five banks would be finished in less than two weeks, and Canada would be financially ruined.

We have a doubled-ended problem here. Young farmers who want to obtain land to get into agriculture need to be balanced with those who are trying to exit from the industry. Retiring farmers have viewed their investment in their land as their retirement savings plan. However, most landowners I've spoken to tell me that no one in their community can afford to buy them out. It would make sense to offer zero-interest programs to young farmers or expanding farm producers as an incentive to buy out the retirees.

With land becoming more available through an aging farm population, there also need to be programs available to smaller farmers wanting the opportunity of expansion. As an example, if a 500-acre guy were to try to expand to 1,000 or 1,500 acres, it's quite likely that the banks would not back him up for higher input costs or more equipment, because he has had limited income in his financial track record. If a larger, more established farmer of, say, 5,000 acres decided to increase by the same 1,000 or 1,500 acres, chances are greater that the banks would work with him because of his higher income track record and greater asset base.

When the kids come back to the farm, you need increased revenue to support another household until the total financial takeover is complete, and that equates to a need for more land or more cattle or more infrastructure to accommodate that extra income. Farmers don't just grow food; we also grow farmers. Starting out in agriculture is often a multi-year, if not a multi-decade, commitment.

Without a financial program for retiring farm producers to take out their investment in their land, you're basically creating a whole new class of poor. Land rents reflect grain prices. Grain prices are, again, at a low. This leaves little option of moving off the home quarter to town, because it's cost-prohibitive. Combine that with the fact that many farm producers have not contributed maximum amounts to their retirement pension plans and you have a lot of older people who are forced to stay on the farm. Healthwise, this may or may not be working for them. Years of very low income levels on the farm as a result of poor agriculture support in Canada will become a taxpayer nightmare. We currently have a substantial number of baby boomers leaving the workforce, no longer paying taxes, who will not be contributing to the tax base to cover this off.

About 15% of the rural population creates 80% of the wealth in Alberta. This is a combination of energy in oil and gas and of agriculture, but as I have said, you can't eat oil. Creating more opportunities will help attract young farmers back to the land. There needs to be a focus on industry development—the ethanol biofuel technology, possibly. This is another government oxymoron. Legislation has been passed to include 5% of ethanol in gasoline; however, the plants to produce it have been slow in materializing. The end result will benefit U.S. farm producers, with imported ethanol to meet Canadian ethanol requirements. How is this building our economy? How is this benefiting Canadian farmers?

Further, we need legislation demanding that the legislated percentage of ethanol in our fuel is Canadian content only. There has been much discussion on the food versus the fuel equation. Every single time I attend a meeting where this topic comes up, I do a quick survey to find out how many people in attendance did not drive their car, and I have yet to find a bicycle rider at that meeting.

The reality is, people will not give up their vehicles, they cannot stop eating, and we need to balance both. We need the plants to support farm producers with a local crop marketing option. We need community income to rebuild communities. We need this industry to help attract young people to the farm.

We need a processing industry in beef and other proteins as well. The larger processors are squeezing the margin out of beef producers and then going broke themselves. We need to focus on local processing to service the ever-increasing demand for local beef, chicken, and pork. One report that I read on locally raised and locally slaughtered beef indicated a substantial price difference between the local option and the commodity marketing of cattle. Locally sold and processed produced $400 per head, while commodities produced $50 a head that with a shortage of water and feed quickly translated into a bill coming from the auction mart instead of a cheque.

Globally we have achieved the highest quality of food production, yet that does not equate to higher prices for farm producers. We are still losing farm producers at an alarming rate because the focus is not on building the agriculture industry, it is on selling farmers out to big business.

The equation is totally counterproductive to enticing youth to return to the farms since they must start smaller and assume huge responsibility over an existing operation, only to know that the odds and support are already working against them. Small operations are more geared to seasonal ag tourism businesses, which means still they have to hold down full-time jobs at the same time. Larger commodity-based operations are often still requiring at least one full-time income derived off the farm to keep their heads above water. Either way, neither option is possible as a full-time career.

We need to balance more on commodities in the World Trade Organization. The EU and the U.S. both enjoy subsidies that are prohibited to Canadian farm producers and we've never had a level playing field.

At the same time, these entities are demanding that the Canadian Wheat Board be wiped off the face of Canada. Obvious lack of government support in this area is a deal breaker and not a confidence builder. When we see a lack of proof that in Canada the CWB would benefit farmers and then take a look at the results of the deregulation of the Australian Wheat Board, which has resulted in substantial pricing loss to farmers, it creates a mistrust that the government is ever acting in our best interest.

Russia is now looking at starting their own wheat board fashioned after Canada's, to rebuild their lost agriculture industry that occurred largely due to government interference in the production of their food. The result was that they became net food importers. This is counterproductive to what the public is demanding in food sovereignty.

BSE had a huge negative impact on farm producers across Canada. Government has failed to take responsibility for the damages caused to farm producers. Farmers have had to launch a class action lawsuit and recently a petition demanding mediation to get issues resolved.

Bill C-474, fighting for farmer rights to have markets analyzed before big business and government dictate to us what we are allowed to grow and where we are allowed to sell it, and other bills legislated that take away our rights to our own land don't do much to attract youth to this industry.

We have lost our rights to our seeds. There is only corporately controlled research now. The Canadian Grain Commission is being broken down piece by piece. The CWB is under attack. We're currently losing our water rights in Alberta. We've lost our property rights to legislation over a fight with AltaLink. There is a new leaked document out there that says we are about to lose more rights to huge multinationals and that if we don't comply with their intellectual property rights they have the right to retaliate and freeze our bank accounts and prohibit us from doing business on our own land.

The WCB occupational health and safety now wants to control our every move in regard to staffing, to get their piece of our farms.

The margins at the store are getting exponentially larger. The margins on the farms are getting exponentially smaller.

So my question to the committee is, does this sound like a business you would want your kid entering?

Many contributing factors have led to the decline in agriculture in Canada, much of it due to government policy being overall ineffective. The results speak for themselves.

It should be a requirement that all government ministers, either provincial or federal, have a history of success in the portfolio they are assigned. In the private sector, it would not be done any other way. It has taken legislation to get agriculture into this mess, and it will take legislation to get agriculture out of this mess. We will not see youth attracted to the farms until that occurs. The successes in farming are substantial, tangible, and long term, and if they can compete with the successes available in other industries we may see more youth coming back to the farm.

There needs to be a complete switch in government mentality with regard to agriculture. Instead of focusing on ridding Canada of all family farms, there needs to be a focus on building them up. There needs to be a solid recognition of the contribution that agriculture makes to our overall economy, to rebuilding suffering rural communities, to fulfilling the demands for local food by your urban voters, the huge financial contribution to export markets, and the substantial economic ripple effect of food-related industry. Our family farms do feed the world, our family farms do support the Canadian economy, and we need a lot of changes to occur before the kids are going to be willing to come back to our farms.

[The Chair, Conservative, Larry Miller]

Thank you very much.

I'll now move to Wyatt Hanson.

Wyatt, you're an atypical example, I guess, of the people we're trying to encourage to come to agriculture, so thanks for being here. I understand you're only 17, so I give you a lot of credit for coming here and doing this. Thank you.

[Wyatt Hanson, Farmer, As an Individual]

Thank you.

Hello. I'm Wyatt Hanson. I'm going to tell you guys a little bit about myself. I have lived on a ranch my entire life. We have operated an award-winning purebred ranch, and sold our genetics over four continents. In 2001 we decided to sell our purebred operation. We got right back into the commercial business in the hope of a larger profit margin with less labour. Within a year, BSE hit, and we were right back to the drawing board to change our philosophy.

At that time we started managing a herd for a businessman out of Texas. We were going 24/7 just to make ends meet. In 2008 we sold 500 of our commercial herd. When this decision arose, my parents asked my brother, sister, and me the question, do you want to continue on with cattle? At this time we were having labour issues. My parents were working 18-hour days and we were working 30-hour weeks with school. This led us to the conclusion that we love the cattle and we love the lifestyle, but we cannot find a paycheque at the end of the day. So my parents decided to try custom grazing, and this is where we are today.

I am interested in going to university to study international business at the end of next year. I have been in 4-H for seven years and have had all of the beef projects. I have been involved with junior cattle shows, and currently I am on the Alberta Junior Hereford Club board and in the Airdrie and District Agricultural Society. I enjoy the farm, but I do not enjoy the stress and the physical abuse we take to enjoy it. I believe we should run farms purely as businesses.

I am unaware of any other business that relies on government handouts, besides fishing, to make a living. If you were to buy a trucking company or a retail store, your investment should show a return in six to twelve months, and should pay for itself in three to five years. If you were to go out and buy a ranch to run 300 to 500 cows, you would need 3,000 to 5,000 acres, and that would cost you $3 million to $8 million, depending on the location and the quality of your land. You would also need about $1 million for equipment and $500,000 for cattle inventory. The expenses for the year would run you between $300,000 and $500,000, and you would need $100,000 for the owner's family wage.

I would like you to refer to the handout for the stuff I just talked about. It's on the last page. If there are any questions, I'll answer them at the end.

Today we are selling our calves for $660, which is 79% less than what is needed to run a business. Some say that this is greedy, but if we want to compete for input products like fuel, machinery, fertilizers, and pharmaceuticals, we need to work under the same rule of business as any other company.

So how are we holding on? Number one, a high percentage of the land was paid for before 1970. Number two, we have older farming communities. Number three, farmers don't pay themselves or the family help. Number four, younger farmers borrow against the paid lands, and they use this money to pay for operation expenses. Number five, 80% of the family farm's income comes from off-farm jobs. Number six, the fact that our machinery is getting older means that one day higher debts will occur upon replacement or repair. Number seven, the quality of our inputs is decreasing, so that means the quality of our outputs will suffer.

Our ranch sold our commercial cattle to a businessman with a junior oil company and an airplane hangar construction business. He bought a good ranch, put machinery and the cattle on it, and was bankrupt within 18 months. We would find that to be the same result for most businesses that tried to play in the world of agriculture, because the agriculture business can suck money out 80% faster than it can be put in when starting from zero.

From the previous assessment, it makes me ask myself some questions about my future. Number one, why would I enter into a business where there's little to no room for me to advance my business? Number two, if I were going to enter into the business of agriculture, to be fair to my parents I should have to buy them out so that they can retire, and so my brother and sister can live out their dreams with their share.

Even if I were gifted my share, I could not afford to get enough capital together to sustain a farm big enough for me to make a living. If I have to get a job to afford the farm, I might as well just get a job.

Make no mistake, I love our farm and I love our history. I enjoy breeding the best cattle we can and I enjoy feeding, calving, weaning, and marketing. But I do not enjoy the frustration of having a superior product that is worth less than it costs to raise it.

I am also frustrated that the priority of our society is on material wants more than the value of our food. I understand that shopping makes our economy strong and assists us in our global trading position. This appears to be heading, perhaps, to a critical situation. Agriculture contributed about $80 billion of Canada's gross domestic product in 2002. Without the family farm, rural Canada will become a ghost town.

I do not believe that the problem with agriculture is a national problem; I believe this is a global problem. We are not alone. Farms all over the world are going broke. My greatest concern is that family farms are in danger of becoming extinct. Within 20 years, the Cargills and Tysons of the world will own the agriculture industry. This massive correction will explode the price of the agriculture products to even a point beyond where it should be today, because these companies are only operating at a profit.

Until agriculture can control either our expenses or our pricing, or both, I can't see a future in agriculture for me.

Are there any questions on the green sheets?

[The Chair, Conservative, Larry Miller]

Actually, on that, it's the rules of the committee that they have to be translated in both languages. That is going to be done, and we'll have it. I'm sure there will be lots of questions.

By the way, your presentation was excellent. Some of the comments you made certainly reminded me of my three sons, none of whom are farming or going into agriculture. I'm sure you're going to have some good questions coming to you. Well done.

Mr. Butler, it's your turn.

[Gordon Butler, As an Individual]

I'd like to thank you for the opportunity to speak to you. I didn't have a written submission because I found out about this from Kevin Sorenson on Thursday of last week, so it's fairly short notice.

What I'm going to do is talk to you about the history of my ranch and why my children aren't coming back to it.

We started in southeastern Alberta in what was called the dust bowl of the 1930s. My parents came out in 1951. Today we ranch 41 homesteads.

Ranching only survived through the decades because it was on large tracts of marginal land. It was either too hilly, too wet, too dry, too many trees, or too rocky for any other type of agriculture. So we have vast tracts of land. There are some ranches in my area with over 100 sections. It takes 100 acres to run one cow. Where I ranch, it's pretty lush. We're down to 40 acres to a cow.

Over the years, with a ten-year cow cycle, if you kept your operating costs down, you made a decent living. You didn't get rich at it, but you had a good living and a good life, with common-sense regulations. About ten years ago, the floodgates for those regulations opened up and it hasn't slowed down since. It was not BSE. It was not the reason for the regulations; it was the excuse. If you go back to the sixties, my father fought Mr. Whelan, the agriculture minister at that time, to try to put in a marketing board for cattle. Then on-farm food safety came in, and it's just been one after the other--regulations, regulations, regulations. Every one of these regulations costs us money.

Right now, it's about $100 per calf lost every year on our operating costs, to what we can sell for. That's average. Some places are higher than that, some places are lower than that because of how your operational costs are. Extra regulations right now, according to the industry, is over $80 a head, over and above our competitors. So if those regulations were even brought down to what our competitors were--the United States--we would come close to breaking even. We wouldn't be making any money, but breaking even.

The regulations have just about brought this industry to its knees, and it will kill it. There is more coming out all the time. The Canadian Food Inspection Agency, in my opinion, is a runaway with itself, with regulations. They've come out now with what they call a bio-security plan. The first point is to control visitor access to your animals. Will you tell me, on a ranch that's 100 sections, how I am supposed to control access when the provincial government mandates me to allow hunting on there? Number two is prevent contact between production animals and wildlife. Again, would you tell me how I'm supposed to prevent wild animals from being in contact with my animals?

The Canadian Food Inspection Agency is a runaway. I'm going to put it back on your shoulders. You are the ones we elected to keep things like that under control. You're the ones letting go.

The second part is the lack of property rights. In this country we don't have the right to own, we have the right to enjoy. That's all we have. You look in the Constitution and that's what it is. I've been on three different boards on property rights in this country over the last 13 years, both federally and provincially. The Species at Risk Act came into force in 2006, I believe, in June. Because of these vast tracts of land that have not been farmed or have gone back to native grass, guess what attracts them? We get all kinds of endangered species. Of the list in my area of 14, at times I've had at least 12 of them on there. I figure I'm pretty lucky. There are two that I don't have at one point in time. That act, if you get into it, is very intrusive on property rights. They can come in, and Mr. Pearce, who's the head of the compensation part of that act, felt--and I had a personal meeting with him in Calgary--that it was our duty because we're on the land to protect these species for the rest of Canadians, with no compensation. If it got down to impacting us at least 50% of our production value, we might get some compensation.

On the Navigable Waters Protection Act, in Alberta we have a lot of navigable water. I see ships going up and down here all the time. But it affects every part of this land in Alberta, and any stream you can float a vessel down at any given time of the year--in other words, in flood conditions. And a vessel has been relegated right down to a rubber dingy.

I have a creek at my place that runs from nowhere to nowhere. Once in a while there's a few fish in there. With stock ponds, the ducks and geese will go in, scoop up some mud, and deposit eggs. They hatch but they don't live long. The Department of Fisheries and Oceans controls that creek, so if I want to put a bridge across it or do any development, I have to go to them to get permission. That's not a pleasant deal.

Between the federal government and the provincial government in this country, they've relegated people on the land back to being serfs in a feudal system. If you look up the definition of a serf--and this is a World Book definition--it says that as a peasant in a feudal system was midway between a free man and a slave, “serfs were generally bound to the soil...and required to provide certain payments and services to their lord”. To me, we're serfs.

Property rights are fundamental for us. I make plans on my grass and water for ten years out. I have to in that dry country, because if I don't I'm in trouble. So to me and the ranching community that makes their living off marginal land, property rights are fundamental, and I think they should be fundamental for every Canadian. Part of a free and democratic society is the right to own and benefit from that property. We don't have that in Canada. You guys can deregulate and put property rights in. I'm not looking for subsidies; I'm not looking for anything. I'm looking for less government to help our industry.

My daughter came back to me a year and a half ago, after her marriage broke down. She has a daughter who has a learning problem. She said, “Dad, I want to come back to ranch”. Good, I said, because if I raised a rancher it was her. Two weeks ago she came to me and said she didn't want it. It's strictly because of the regulations and the lack of security. It's not because of money. I'm very fortunate that I don't owe a dime to anybody. We're working on a way to transfer the place to her without costing her, and we'd have a retirement. But because of regulations and no property rights, she said “No thank you. I'll go do something else.”

Thank you.

[The Chair, Conservative, Larry Miller]

All I'll say is amen to smaller government.

[Gordon Butler]

You're the power to do it.

[The Chair, Conservative, Larry Miller]

I hear you.

We'll go to questions. I remind members to try to keep the questions direct.

First is Mark Eyking, from the Liberal Party, for seven minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Chair.

I thank all the guests for coming here today.

Mr. Hanson, that was a great presentation. I was a 4-H member, and one thing it helps you with is not only agriculture practice but public speaking. I can see that you were paying attention to your 4-H leaders. Good job.

Mrs. Staniforth, you mentioned generational transfers. That's been brought up quite a bit in the last few meetings. In Europe, some countries have a perpetual mortgage, they call it, and the government has a bit of a stake in the financing of a farm. I'm just going to use a hypothetical situation. Let's say that your farm is worth $800,000. You're 60 to 65 years old already. You're ready to retire. You're ready to be moving on, but you still owe a couple of hundred thousand. You're still making payments. A young farmer, particularly if it is one of your children, would come in. So much money would go to you automatically, and so much would be left that the government would still have owing there. You would have a situation where that young person is not all of a sudden burdened with so much debt. It would be easier for them to pay it off, and you would also have your own nest egg.

Should we have something different in the way it's set up? Maybe it wouldn't be just interest forgiveness for the first couple of years for young farmers. Maybe there would be some sort of mechanism whereby more people would have a stake in that farm than just the individual or that young couple that is striving to make a go of it. That's my first question: Should we be looking at different setups?

My second question goes to Mr. Stokes. We heard from the orchard growers yesterday--and I think we're going to hear a lot of it as we go through this--that the suppliers and retailers are taking a big chunk out of this, mostly because they're getting bigger and bigger. Do you think government should get more involved in keeping a check on that? Should there be more regulations? Should the Competition Bureau--our committee just studied fertilizer companies--be more of a watchdog over how they're gouging the farmers on that end?

My third question would be to you, Mr. Butler. You mentioned very clearly that if the regulations were gone or diminished greatly, you would feel that you'd be able to compete with the Americans on beef. My understanding is that in the U.S., they have their own wildlife act and a waterways act. They have many of the acts and regulations we have here. When we talk to a lot of beef farmers across this country, the number one big problem they see with the Americans is the Farm Bill, which gives an almost $1 per bushel subsidy. My question to you is whether you think your daughter would get in if these regulations went down. Or do you think it would be more helpful if, for instance, that food bill weren't there in the United States?

I know that these are three loaded questions. I think if you go first, and we just keep it tight, we can go from there.

[Margo Staniforth]

I'm not really sure what the answer is. I'm not sure what's going on over in Europe. But a number of years ago there was a situation called the land bank that I did bring up in a meeting with Alex Atamanenko in Ottawa.

Briefly, just to throw it on the table, I don't think the answer is that the government have more hold or long-term hold on our personal property. I don't think we're looking for more government control. We're looking for fairer prices in the marketplace, which have been absent consistently for years and years. That's the problem. If we were actually running our businesses at a profit like normal businesses do....

I've run five businesses. I've owned two. When I married my husband and got into farming, the first instinct I had was to run, because my God, I had no idea that there was so much government control. I don't think that's the solution. I don't think that's the direction we need to be going. We need to really assess why it is that family farms cannot get paid for the high-quality product we have been producing. We've had this pushed on us and pushed on us that high quality, plus efficiency.... We've adopted all the efficiencies known to mankind and God. We have the highest quality. It's world-recognized. We still can't get paid.

The problem is that there needs to be more analysis as to where that dollar is going. We started having a review in the beef industry a number of years ago. I don't know where it went. It fizzled and died.

I think there is more government accountability to big business--the Cargills and Monsantos of the world--than there is to the farm producer. That is the equation that needs to change, and that's going to take the global mentality changing.

We're hearing that the cheap food policy in Mexico pushed half a million farmers off their land. Costa Rican farmers are suffering. American farms are suffering. Canadian farms are suffering. We are the people who are feeding you. We can't stay in business. We're over-regulated to death. It's like the government has us in a box and is sitting on the lid. It doesn't matter what we do, we can't get out of it.

I don't think farm producers are going to say, yeah, bring the government on and get them involved in a 40-year equation on my farm. Personally, that's not for me.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Stokes, there's about a minute left.

[Darrell Stokes]

Your question was what government should do about what we think of as price gouging.

I don't really see it that way. I think that farmers need to have market control, and we have some now with the institutions that are in place. The market control we would like to have, of course, would be to say that you need to sell this loaf of bread for $2 and give us 50¢ of it. That's not going to happen, obviously, with the kind of marketplace we live in. We have to be careful that the institutions that protect us and give us the best chance at this marketplace are left intact.

I don't see regulation as being an issue here, at least in the part of the industry that I'm talking about. I refer to the time a couple of years ago when the price of wheat went to $8, $9, or $10 and the price of bread in the store went up 20¢ a loaf or something like that. The farmers were basically blamed by the consumer advocates, saying that because the farmers are getting more for their wheat, now you have to pay more for your bread. That was absolute nonsense, and nobody I'm aware of ever took issue with the people who were saying that the farmers were now gouging another 20¢ for a loaf of bread because they're getting paid. Considering that the value of the wheat in the loaf of bread is so minor that....

In the context in which farmers are seen in the supermarkets of the country, we play a very small role. It would be great if we were able to educate our consumers with the idea that if they paid a little more for a loaf of bread and that increase in the value of the loaf of bread went directly to the farmer, then we'd really have something. But it wouldn't happen, because if the price of bread went up, everybody in that whole chain would take their percentage, and the farmer would end up with very little more than we get now.

I don't think we're looking at regulation. What we want to accomplish is to keep the institutions that are actually working on our behalf and giving us at least some modicum of control in the marketplace.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, you have seven minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Just for the witness, he might be able to add it later, I guess. I know there's not enough time, but he'll be able to talk about it later, will he, time permitting?

[The Chair, Conservative, Larry Miller]

Okay.

Mr. Bellavance, you have seven minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you. Good, I am the only one not wearing an earpiece. Usually, it is the reverse.

Mr. Hanson, I appreciate your testimony. I have been on the Standing Committee on Agriculture and Agri-Food for five years, and I have the feeling you are the youngest witness we have ever heard from. That is the case for me, anyways. Perhaps someone like Mr. Eyking, who was here before me, can think of other presentations, but yours was very interesting and, at the same time, it echoed somewhat what we have already heard. We did not start meeting with young people yesterday. The committee began its study yesterday out west, but we have been meeting with the next generation of farmers, young farmers, for years now. And what you said is very much in line with what we have been hearing for several years, namely, that it is nearly impossible to take over a farm. This is less of an issue among farmers who practice supply management, but apart from that, the same problem always comes up. The land is very expensive. If parents want to get a price that reflects the value and they wish to pass the farm on to a son or daughter, obviously that son or daughter cannot afford to buy it. If the parents sell the farm at a lower price, their retirement fund goes out the window. So this is a problem that young farmers have to face.

You said that taking over the family farm nowadays is not necessarily a good idea. A few years back, the Bloc Québécois held a symposium on the next generation of farmers in Quebec, and it gave rise to some possible solutions, some recommendations. Obviously, we are still discussing it today, so we did not find a solution. There is not just one solution, but several. We are happy to hear your suggestions.

I want to share with you a few of the recommendations that came out of the symposium, to see whether we cannot continue to urge the government to move forward on them. For example, today we can use our RRSPs, or registered retirement savings plans, in conjunction with the home buyers' plan, or the HBP, to buy a home. Young farmers suggested the possibility of using the HBP to buy a farm property, not just a home. They also suggested being able to use it to become co-owner of the farm. That would mean that a young person—of course, it would be hard at 17, but after a few years of investing in RRSPs—could use his investments to become co-owner of the farm with his parents through the HBP. And for the parents, it would represent a type of retirement savings plan, but for farmers specifically, so a tax-sheltered retirement fund that would accumulate over the years. As with a pension fund, the government could also contribute to this type of savings plan, as it does for the education savings plan. That way, if the fund were used to help the next generation of farmers, older farmers could keep some money for their retirement. That is one tax measure that would be relatively easy to adopt, that would not cost the government that much and that might give young people the leg-up they need to follow in their parents' footsteps.

[Wyatt Hanson]

I like the idea of having the RRSP; however, even if my parents did the co-ownership, as you suggested, I don't think there would be enough money at the end of the day for me to make a living from the farm, as I said in my statement. So it would help me get the land and help my parents retire, but I wouldn't be able to do anything with the land. The land would sit there empty, and I would then have a whole bunch of land to sell when I get older. It would help my parents retire and would help me get the land, but I wouldn't make a living from the farm, and then I would have a job off-farm to make a living.

Does that answer your question?

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

That partly answers my question, but I would like you to explain, not just in your case—I am sure that you attend 4-H club meetings with other young farmers—what your message is. You said that you would have a hard time taking over the farm, that you did not think you would be able to do it. What is your message to the government in terms of—it is hard to say solving the problem—but at least in terms of giving young farmers the leg-up they need? What do you want the government to do so that you or other young farmers could take over the family farm?

[Wyatt Hanson]

Perhaps the federal government would be interested in putting in a plan that allowed the producer to get paid directly from the product that is sold in the retail store. So perhaps that would be a taxation similar to the recycling fee we pay so that all the bottles go back and people are returning them. Perhaps we could use our identification system, CCIA, to make sure the funds are going back to the farmers. That might alleviate some pressure quickly.

But I think the long-term solution is pretty far off. We need to be able to make about $8 a pound in order for the farmer to break even and make 10% on his investment. Right now we're making about $1.10 a pound.

The immediate problem could maybe be fixed by the taxation, but I think it needs to be completely redone. And I'm not sure how that's to be done, but you guys are the ones we elected, so hopefully you can find a solution to that.

[The Chair, Conservative, Larry Miller]

Mr. Atamanenko, seven minutes.